Module 1: Concept building and role identification
Topic 1: Concept of micro-enterprise
Activity: 2: Defining micro-enterprise
Activity 3: The role of micro-enterprise development in the WPD project
Topic 2: Causes of success or failure of a micro-enterprise
Topic 3: Role Identification in micro-enterprise development
Activity 1: Common weaknesses and constraints of micro-entrepreneurs
Activity 2: Role of project officers in assisting micro-entrepreneurs
Annex 1. Visual Aid: 1-1 Characteristics of micro-enterprise
Annex 1. Visual Aid: 1-2 Roots, indications and consequences of women's low status
Annex 1. Visual Aid: 1-3 The business cycle
Annex 1. Visual Aid: 1-4 Factors affecting the success or failure of business
Annex 1. Visual Aid: 1-5 Common weaknesses and constraints of micro-entrepreneurs
Annex 1. Visual Aid: 1-6 Type of project assistance for micro-entrepreneurs
Annex 1. Case: 1-1 Lin's cabbage garden
Annex 2. Case: 1-2 Xie Feng Yun's tea processing project
Annex 2. Case: 1-3 Pai Lou grocery shop
Annex 2. Case: 1-4 Ms. Yuan Wang Ti's tobacco production project
INTRODUCTION
Module 1 addresses important basic concepts about micro-enterprises, micro-enterprise development, the place of micro-enterprise development within the broader development framework of the Women, Population end Development Project, end the role of project officers in micro-enterprise development.
OUTPUT OBJECTIVES
At the end of Module I, participants will be able:
1. To understand the role of micro-enterprise development within the broader context of the objectives of the WPD project.
2. To identify the characteristics of micro-enterprises and the types of enterprises.
3. To identify the causes of success/failure of micro-enterprises.
4. To identify the common weaknesses and constrains of micro-entrepreneurs.
5. To identify the proper roles of their project office in micro-enterprise development.
Background and Rationale
The Women, Population and Development (WPD) project aims at improving the status of women through income generating activities and social development activities. Income generating activities therefore are not an end in itself, but a means to achieve the overall goal of improved status of women. This implies that the project supports those income generating activities which contribute most to improving women's status, namely micro-enterprises.
For participants to be able to provide effective guidance for women and women's groups in identification, development and maintenance of micro-enterprises a clear understanding is needed of what a micro-enterprise is, and what the role of micro-enterprise development is in the context of the WPD project.
Output Objectives
At the end of the topic, participants will be able to:
1. Define what a business is and distinguish the different types of business;
2. Analyze the characteristics of a micro-enterprise;
3. Analyze the importance of micro-enterprise development in achieving the broader development goal of improving the status of women.
Materials
Newsprint, adhesive tape, thick felt tip pens
Time: 45 minutes
Steps:
1. The facilitator asks the participants to give examples of businesses and poses the question "what is a business?"
2. The facilitator writes the examples provided by the participants on newsprint and asks "What is it that makes each of these a business?".
3. The facilitator will respond to the answers of the participants and gradually arrive at a definition by discussion, accepting or rejecting components of their definition.
4. The facilitator then asks the group to name the 4 different types of business. The examples on newsprint are categorized and the main characteristics of each type of business are discussed.
Important Points
· A business is "any venture which involves production of goods and/or services to obtain profit".
· The four types of business in rural areas are:
a. Production: producing goods for selling, e.g. tobacco growing, sheep raising
b. Processing/manufacturing: converting raw materials into finished product, e.g. processing wheat into flower
c. Trading: buying and selling of the same product(s), e.g. grocery shop, market stall
d. Services: main line of business is providing a service e.g. barber shop, transportation.
Time : 45 minutes
Steps :
1. Facilitator asks participants to break into sub-groups of about 5 persons to list at least 5 characteristics of a micro-enterprise
2. Groups have 20 minutes to discuss and write up responses on newsprint before presenting the findings to the whole group.
3. Facilitator discusses group outputs and explains which characteristics are correct.
Visual Aid 1-1 Characteristics of Micro Enterprise |
4. Facilitator summarizes the session by presenting Visual Aid 1-1 and emphasizes the important points below.
Important Points
· Although capital requirements of a micro-enterprise may be low, to the poor it is high. Therefore, the risk of undertaking micro-enterprise is not low. For the poor it is very hard to recover from failure of the micro-enterprise.
· The main differences between micro-enterprises and other enterprises (such as township enterprises) are:
- level of capitalization
- number of people involved
- ownership: for micro-enterprises the owner is likewise the manager and worker
Time: 1.5 hours
Steps:
1. Facilitator asks the question "What is the goal of the WPD project" and participants are invited to answer.
2. Facilitator states the title of the project: "improving the Socio-economic Status of Women through Income generating and Social Development Activities". This implies that women's engagement in income generating activities is not the final goal of the project, but a means to achieve the broader project goal of improving the status of women.
3. Facilitator explains that project loans for women's groups is intended to enable women to start or to expand their own micro-enterprises. For our work as project officers it is important that we understand why we focus on micro-enterprises and not on other enterprises such as village and township enterprises.
4. Facilitator asks sub-groups to discuss what the root causes of women's low status are ( 10 minutes) and to present the findings on newsprint.
5. After discussing the group outputs, Facilitator puts Visual Aid 1-2 (Roots, Indications and Consequences of Women's low Status) on the wall next to Visual Aid 1-1 (Characteristics of Micro-enterprise) and asks participants to discuss the following Questions for 15 minutes:
"How does engaging in micro-enterprise by women contribute to improving their status? Which root causes for low status are addressed and how?"
6. Each sub-group reports the findings and the facilitator summarizes, using the important points below.
Important Points
· Traditional thinking and culture of dependence are two root causes of low status of women. Major characteristics of a micro-enterprise are that it is self-initiated and self-managed. By encouraging women to engage in micro-enterprise, we encourage initiative, risk taking, making their own decisions and earn their own income. Because all these undertakings are done through their own initiatives, women have a more direct opportunity to experience more independent thinking, they gain more self confidence and self reliance. They are able to participate in socio-economic activities in their communities.
· Limited technical, literacy and business skills are other major reasons for low status of women. Micro-enterprises undertaking requires relatively simple technology and management. When they engage in micro-enterprise women can gradually improve their skills.
· Women have a high burden and sometimes many children. Micro-enterprises usually are household based and women can choose an enterprise which they can combine with their other chores. When women engage in business their desire for more children usually diminishes. A value change occurs whereby women would rather provide better education, nutrition, etc. to fewer children than having many children.
· Employment in other enterprises (e.g. township enterprises) would not contribute as much to improving women's status, because women would be employees rather than managers. Except for technical skills and earning their own income, women are not provided the opportunity to exercise initiatives and are not generally personally accountable for the over-all success of the business. As a consequence, they are not able to experience the personal changes which have been enumerated above.
7. Facilitator then asks sub-groups to discuss why forming women's groups as a self: reliance strategy are important for the women entrepreneurs.
8. Sub-groups discuss for 10 minutes and report. Facilitator summarizes the outputs. using the important points below.
Important Points
· Lack of funds is an obstacle for women to develop micro-enterprises. As a group, women can mobilize resources through savings from which members can borrow for micro-enterprise development. Project loans to the group augment their own funds.
· Group members can study together and share experiences, e.g. on technical and financial matters, market information, etc. Through these group activities member's skills improve faster and to a higher extent.
· As a group, micro-entrepreneurs can be more organized and can use group strength in addressing constraints. For example, the group can arrange training, can buy inputs or run facilities together, can negotiate with buyers, mobilize support from village leaders, etc.
Background and Rationale
In general, the poor cannot take unnecessary risks. Their resources and condition are such that they do not have enough to be able to incur losses. If their venture fails, they lose more than their material resources. It erodes their self-confidence. Furthermore, the poor have some kind of distrust of external assistance. When they fail in projects with external assistance, this could reinforces their lack of confidence in external agents. The field worker therefore has a great obligation that sufficient safeguards are provided so that success and not failure results in women's micro-enterprise undertaking.
This topic gives the participants an opportunity to examine the factors contributing to success or failure of a micro-enterprise.
Output Objectives
At the end of the topic, participants will be able to:
1. Understand the stages in micro-enterprise development
2. Analyze case studies of typical micro-enterprises and identify the critical aspects of micro-enterprises
3. Distinguish external and internal factors affecting the success of a business
Materials
Newsprint, adhesive tape, thick felt, tip pens
Time: 60 minutes
Steps:
1. Facilitator introduces this activity by saying that the resources and conditions of the women who participate in the WPD project are such that they do not have enough to be able to incur losses. If their venture fails, they lose more than their material resources. It erodes their self-confidence and they will even be more dependent on others than before. The field worker therefore has to make sure that sufficient safeguards are provided so that success and not failure results. Providing capital funds alone is not enough. To be able to provide adequate assistance we need to have a thorough understanding of the factors that cause success or failure of a micro-enterprise. These will be discussed in this topic. In the next topic we will discuss the tasks which field workers need to undertake to help rural women entrepreneur succeed in their micro-enterprises undertaking.
2. Facilitator continues and says that first we will refresh our knowledge on this topic through a short discussion about Lin's Cabbage Garden (Manual Group Formation, Module 3).
3. Facilitator forms sub-groups of about 5 persons and reads the case study.
Case 1-1 Lin's Cabbage Garden Tasks |
4. Facilitator asks the sub-groups to discuss the following questions (15 minutes):
a. Is Lin's business successful?
b. If so, what are the factors which contributed to her success?
c. Does the undertaking contribute to more self-reliance?
5. Sub-groups report results of their discussion.
Case 1-1 Lin's Cabbage Garden Output |
6. Facilitator then presents Visual Aid 1-3 to explain the business cycle. In explaining the four aspects of business (production, marketing, management, financial) facilitator asks participants to categorize their outputs of the case. E.g. Lin keeps financial records under the financial aspect. In explaining the stages in business (planning, implementation, evaluation), facilitator asks again to categorize the outputs, e. g. Lin keeps financial records under the implementation stage.
Visual Aid 1-3 The Business Cycle |
Time: 1 hour
Steps:
1. Facilitator puts a newsprint with Visual Aid 1-4 on the wall and explains the meaning of external and internal factors affecting the success or failure of a micro-enterprise.
a. Internal factors are those that are within the control of the entrepreneur. These include the knowledge, skills, attitude and resources of the entrepreneur. If the factors contribute to the success of the project they are called "strengths" or positive internal factors. When internal factors are an obstacle to success, they are called "weaknesses" or negative internal factors.
b. External factors are those that are outside the control of the entrepreneur. These include the market situation, economic situation of the community, the weather, etc. External factors that contribute to the success of the project are called "opportunities" or positive external factors. When external factors may become obstacles to the success of the project they are called "constraints".
2. In order to check whether the meaning of external and internal factors is clear, facilitator refers to the format of Visual Aid 1-4 and asks participants to classify the outputs of Case 1-1 (Lin's Cabbage Garden), e.g. is Lin's financial record keeping a strength, weakness, opportunity or constraint?
3. Participants then are asked to break into sub-groups to analyze a case (Facilitator chooses from Case 1-3, 1-4, 1-5) using the format of Visual Aid 1-4 (give 20 minutes).
Visual Aid 1-4 Factors Affecting the Success or Failure of Business |
4. After each sub-group's presentation, other participants are encouraged to comment on the outputs. After the presentation of all groups, each group is asked to select the most critical success/failure factors from those they have identified.
5. Facilitator processes and consolidates the findings on newsprint, using the filled in Output format which is attached to each of the individual cases and adding participants' major conclusions.
6. Facilitator ends the topic by saying that analysis of the factors affecting the success or failure of a business serves as a guide to determine:
· what external factors (constraints) must be avoided or need to be solved
· what external factors (opportunities) facilitate the success of the micro-enterprise
· what internal factors (weaknesses) should be improved
· what internal factors (strengths) must be capitalized on
This helps to identify what actions need to be taken by either the field worker or the micro-entrepreneur.
Background and Rationale
The WPD Project seeks to assist women micro-entrepreneurs to overcome their weaknesses and reduce the constraints of their micro-enterprises. Project staff needs to be clear about the type of assistance they need to provide.
This topic will focus on the most common problems micro-entrepreneurs encounter and the required project assistance to help them overcome their problems.
Output Objectives
At the end of the topic, participants will be able to: a. Identify the most common areas of weakness and constraints encountered by micro-entrepreneurs; b. Identify the major areas and types of assistance project staff needs to provide to micro-entrepreneurs.
Materials
Newsprint, pens
Time: 45 minutes
Steps:
1. Facilitator reminds the participants that in the previous topic, strengths and weaknesses; positive and negative external factors in the planning and implementation stages of several cases were analyzed.
2. Facilitator asks the sub-groups to discuss the following question:
"Combining those identified in the cases with your own experiences, what do you think are the common weaknesses (attitudes, skills, resources) as well as negative external factors (constraints) often encountered by micro-entrepreneurs?"
3. Give participants 20 minutes to discuss. Ask them to use the format of Visual Aid 1-5 for presentation.
4. Groups present their outputs. Facilitator discusses and summarizes, using Visual Aid 1-5 and group outputs.
Visual Aid 1-5 Common Weaknesses and Constraints of Micro-Entrepreneurs |
Time: 45 minutes
Steps:
1. Facilitator points out the fact that the outputs of the previous activity provided a short list of problem areas for micro-entrepreneurs. It is the project officers' task to turn the weaknesses of the micro-entrepreneurs into strengths and to turn the constraints into opportunities.
2. Facilitator notes that lack of market information is one of the common weaknesses of micro-entrepreneurs and asks what project officers need to do in this area and asks for details on how they will provide assistance.
3. Facilitator asks the sub-groups to use the output of Activity 1 (Visual Aid 1-5, common weaknesses and constraints) to define the type of assistance the project should provide to the micro-entrepreneurs.
4. Give 20 minutes for discussion. Ask to use the format of Visual Aid 1-6 to present outputs.
5. Groups present their outputs. Facilitator summarizes and emphasizes the fact that the role of project officers does not end when the loan is released. Monitoring and follow-through assistance during the implementation stage are as important as assistance at the planning stage.
Visual Aid 1-6 Type of Project Assistance for Rural Women Micro-Entrepreneurs |
Characteristics of a micro-enterprise include:
a. small level of capitalization;
b. initiated and managed by a household or few individuals;
c. self employment (owner is manager and worker);
d. simple technology and equipment;
e. utilization of local resources/raw materials;
f. transactions are often informal (no written agreement, based on personal contacts); and
g. ease of entry.
Reasons |
Indications |
Consequences |
- culture of dependence |
- low self esteem |
- low contribution to household and community development |
- afraid to take risk |
- role in decision-making in household and society is limited or small | |
- traditional thinking |
- short-term vision |
|
- many children |
- mother and child health poor |
- time for productive activities limited |
- quality of life generally poor | ||
- heavy burden |
- quality of children not so high | |
- lack of technical skills |
- low productivity |
- poverty; inefficient use of resources |
- limited business skills |
- income generation limited |
- limited or small contribution to household income |
- limited experience in business | ||
- low literacy |
- lack creativity |
- narrow world view |
- lack of funds |
- income generation limited |
- contribution to household income limited |
- lack of organization |
- local resources not tapped |
- waiting for government to help |
The four stages in micro-enterprise development are:
a. Opportunity scanning
b. Business planning
· production
· marketing
· finance
· organization
c. Implementation
· production
· marketing
· finance
· organization
d. Evaluation
Once an enterprise has completed a business cycle there are three choices:
a. to open a new business
b. to continue with the existing business
c. to cease to operate the existing business
Internal Factors |
External Factors | |||
Stage in Business Cycle |
Positive |
Negative |
Positive |
Negative |
Strength |
Weakness |
Opportunity |
Constraint | |
Planning Production |
||||
Marketing |
||||
Financial |
||||
Organization |
||||
Implementation Production |
||||
Marketing |
||||
Financial |
||||
Organization |
||||
Most common constraints and weaknesses of micro-entrepreneurs
Internal (weaknesses) |
External (constraints) | |
PLANNING STAGE | ||
Marketing |
No thorough market investigation due to lack of information |
Information not available to micro-entrepreneur |
Production |
Limited technical skills |
Government services limited to certain groups; not all micro entrepreneurs reached by technical advisory service of the government. |
Financial |
Lack of capital |
No access to credit |
Organization and Management |
Limited skills in estimating income, shortsightedness, low business consciousness |
Lack of information/education |
IMPLEMENTATION STAGE | ||
Marketing |
Lack of market information, No contracts/lack of negotiating skills Inability to adjust to market changes |
Market fluctuations/price control Information not available |
Production |
Problems with quality of product In-efficient production |
No adequate training and advisory service available |
Financial |
No record keeping No profit/loss statements Mixed accounts of the project with other projects/household accounts. |
Lack of training programs in household budgeting and financial recording |
Stage of Business |
Type of assistance by project office | |
Planning Stage |
· assist in market investigation and provide market information to micro-entrepreneurs | |
· linkage with relevant institutes to provide technical skills training | ||
· training and assistance in business planning for any aspect of the enterprise (production, marketing, financial, management) | ||
· encourage savings mobilization and provide project loans | ||
Implementation Stage |
· link to market to provide timely market information | |
· link with relevant bureaus to provide regular technical assistance | ||
· training, monitoring and assistance in: | ||
- record keeping | ||
- areas in which the entrepreneur is weak, which can be in any aspect of the enterprise (production, marketing, financial, management) | ||
- savings mobilization | ||
· continuous assessment of entrepreneur's needs and provision of | ||
· appropriate training/technical assistance | ||
Task
Lin is a farmer in the Dazhai village in Inner Mongolia. She has 2 children. Her husband works as a factory worker.
Lin tills 5 mu of rice land. For many years she has been tanning rice and has not made good profits.
Because of her very low profits from cultivating rice, she thought about planting vegetables. But before she made a decision, Lin made a careful survey in the market of which types of vegetables are in demand and commands higher price. She went to several market places and found out that cabbage sells at a very high price and were in high demand.
She went to an agricultural technician from the Agricultural Bureau and asked how cabbage is grown. Fortunately there was a workshop to be given on cabbage for 2 days. She attended the 2 day workshop and learned how to raise cabbage. Since the workshop was basically conducted through demonstration and field practicum, Lin learned how to plant' water, fertilize, weed and harvest cabbage. She also learned that on 5 mu of land, she will need 200 yuan for land preparation, fertilizers, chemicals, labor and other incidental expenses.
Lin has only 100 yuan. She went to her parents and requested for a loan of 100 yuan at 2% interest per month. Then she went to the market place and secured the commitments from buyers for her cabbage produce. With a ready market for her cabbage, she started to grow cabbage in her land. She religiously followed what she had learned from the workshop at the Agricultural Bureau. I in recorded all her production expenses on cabbage production.
After 3 months, she started harvesting cabbage and selling them to her buyers. She also recorded all her sales. Her total sales amounted to 600 yuan. She made a profit of 400 yuan. Out of the profit, she paid her loan of 100 yuan to her parents including the interest. All the rest of the profit, she reinvested in cabbage production by renting an additional 5 mu of land.
Tasks
1. Is Lin's business successful?
2. If so, what are the factors which contributed to her success?
3. Does the undertaking contribute to more self-reliance?
Output
(a) Marketing
· Lin conducted a market survey;
· She determined the demand and price of cabbage;
· She secured her sales through negotiations
(b) Production
· Lin attended workshop in production of cabbage;
· She knows the proper practices involved in cabbage production from land preparation to harvesting of produce;
(c) Financing
· Lin used her savings and secured a loan;
· Lin reinvested all her earnings in cabbage so she can expand her business;
(d) Management/Organization
· Lin took care of all stages of production according to what she learned from her workshop (land preparation to harvesting);
· She kept a record of her transactions.
(e) Self-reliance
· Lin has the principle of self-reliance, since she showed initiative of thinking about something new by herself;
· Lin was realistic in that the micro-enterprise she chose was small, relatively low risk and can be managed together with her other tasks; relatively simple technology and low investment; relatively short production-cycle (less than a year), so quick return of investment; contribute to cash income;
· Because Lin succeeded, her confidence and enthusiasm has increased;
· Lin's management skills have improved because now she has first hand experience; she has learned a new technological skill.
Tasks
Ms. Xie Feng Yun is one of the active members of the women's group in the Guidun village, a farming community with rolling terrains located some 30 km from the Tongshan county. Like other households in the village, her husband is engaged he farming and wood gathering. She's 33 years old and takes care of the household work and their three children.
Since she joined the group she has been thinking how to help her husband generate additional income for the family. At first, upon discussion with other women members, she thought of a small scale furniture workshop. But the capitalization required was 50,000 Yuan and she could not afford such capital.
She finally decided on a tea processing project. The raw materials (tea leaves) are readily available in the village since most farmers, including her husband, grow tea in the village. Moreover, she learned from the peddlers who often visit their village looking for tea leaves, that processing tea would earn her good income. She learned from them that if she sells in Tongshan county, she can make a gross profit of 20 rmb per jin and or even higher at 1 20 rmb if she sells in Wuhan. Also, she has a younger sister who used to work in a tea processing factory and she was confident she could learn the techniques required in such activity.
Encouraged by the potential of the project she obtained a loan from the women's group. In addition, she had some savings of her own and she was able to start the project in March 1993.
In spring the tea crops produce the best quality lea leaves. Ms. Xie decided to process tea only during this season For the whole season she was able to sell 56 jin. In selling at Tongshan she later learned that there are different prices depending on the quality of dried tea. Nevertheless after investigating which among the three buying stations in Tongshan offered the best price, she settled into one station.
She however incurred losses when she tried to sell in Wuhan. About 20 jin was not paid for at all.
She personally took care of the project. Her husband and children assisted her in some of the activities of the project like gathering of wood for the stove and stirring the leaves on the pan. They could process 5 jin of wet leaves per day. She had minimal expenses for the project. She bought about 50% of the wet tea requirements from the village. The rest of the wet tea leaves, she obtained from their own harvest. She also had sufficient wood oil which was already good for the whole season She did not buy the needed pans as she had already two before the project and these were enough for the quantify she has been processing.
She was not able to keep records of the financial transactions but she is confident she was able to earn from her business. Although the income of the project is mixed with their other household income, she was sure that the whole net profit was used to invest in another project, a chair manufacturing project. At the same time, she is planning to expand her tea processing project for the whole three seasons that is including during summer and autumn. She also plans to hire workers so that she can process more.
Task
1. Analyze the internal and external factors that affect this micro-enterprise, using the format of Visual Aid 1-4.
2. Is this a good project for Ms Xie Feng Yun to become more self-reliant? If so, why, how?
Xie Feng Yun's Tea Processing Factors Affecting the Success or Failure of Business
Output Task 1
Internal Factors |
External Factors | |||
Business Stage |
Strengths |
Weaknesses |
Opportunites |
Constraints |
A. Planning Stage |
||||
Production |
· Raw materials grown by family |
· No skills. but sister can assist |
· Villagers grow tea |
|
· Sister has skills in tea processing |
||||
Marketing |
· No concrete market info (relied on informants info) |
Tea factory in town |
||
· No anticipation of quality requirements |
||||
Financial |
· Own savings |
· Loan from women's group capital available |
||
Organization |
· Husband supportive |
|||
B. Implementation |
||||
Production |
· Raw materials availability |
|||
· Skills learned easily |
||||
Marketing |
· Lack negotiating skills |
· Only 1 good market outlet | ||
Financial |
· No records |
|||
· Mixed accounts |
||||
· Can not determine |
||||
real net income |
||||
Organization |
· Supportive family |
|||
Output Task 2
Undertaking of this micro-enterprise strengthens Ms. Xie's self reliance, because:
· she learns technical skills as well as business skill, eg. negotiating, decision-making, risk taking
· she has acquired the support of her family members
· she raises capital by herself and increased her own income
· she plans and manages the enterprise herself
· others will respect her for her achievements (break through in traditional thinking)
Tasks
Pai Lou is a farming village with 102 households (940 population) of Fuyou township. Since the village is quite far from the township proper, people used to buy their groceries in the township operated grocery shop in the village. the shop however was not very well run as the operator was ill for some time.
Realizing this situation. Ms. Tao Tong Lian thought of operating her grocery shop right in the village. Their house is located in the center of village, hence it is very convenient for most villagers to come to her store. She constructed a small shed to convert part of her house into the grocery shop.
She obtained a loan for the shop from the women's group. I his amount plus her own savings (total 1000 rmb) enabled her to refurbish the shed and to buy in wholesale grocery items from the township.
Seventy percent of her groceries are food products, like canned goods, soft drinks and beer while 30% are basic necessity items such as soap. She goes to the township about 5 to 6 times a month to buy her groceries. Besides transportation she has to pay a tax regularly.
About fifty percent of the villagers buy from her shop on credit which they pay witch 10 to 30 days. The rest buys on cash. She reported a gross sales of 1,500 Yuan/month and gross margin of 20% on her groceries.
So far her business is doing well. Fast selling items are usually the consumable items like beer, soft drinks and cigarettes. Since she's also busy with other work, she let her child look after the store. Likewise, she has not enough time to regularly record her financial transactions. She accepts that sometimes the family consumes some of the grocery items of the shop and these are not recorded.
Task
1. Analyze the internal and external factors that affect this micro-enterprise. using the format of Visual Aid 1-4.
2. Is this a good project for Ms Tao Tong Lian to become more self-reliant? If so, why, how?
Pai Lou Grocery Shop Factors Affecting the Success or Failure of Business
Output Task 1
Internal Factors |
External Factors | |||
Business Stage |
Strengths |
Weaknesses |
Opportunities |
Constraints |
A. Planning Stage |
||||
Production |
||||
Marketing |
· house at center of village |
· township grocery no good (clients not satisfied) |
· far from source of goods | |
· knows goods that sell well |
||||
Financial |
· own savings |
· loan from women's group capital available |
||
· knows margin decision |
||||
Organization |
· supportive husband |
|||
· time available |
||||
B. Implementation |
||||
Production |
||||
Marketing |
· correct commodities inventory |
· no inventory record (consumption mixed |
· wholesale purchase possible |
|
Financial |
· no records |
|||
· income not clear |
||||
Organization |
· child available as keeper |
· time availability of husband and wife |
||
Output Task 2
Ms. Tao has shown that she has the principle of self-reliance in that she has identified the opportunity for a successful enterprise, has raised the capital, prepared well before starting and makes a profit. However, since she does not manage and oversee (no financial records, mixed accounts) her business, she does not fully develop her talent to grow into a skillful and successful entrepreneur.
Tasks
Ms. Yuan Wang Ti is one of the members of the women's group in Pai Shu village. Pai-Shu is a farming village with hilly terrain and located some 4 km away from the town proper of Huangxia. Her family plants rice and corn. Within the year, her husband can make two croppings of rice and corn. The rest of the year, particularly during winter season, her husband grows other crops such as wheat and beans.
To help her husband, Yuan Wang Ti raises pigs and ducks. But these crops as well as the livestock raised arc mainly for consumption. The family has three children, the youngest about a year old. Her father also resides in their household.
In the beginning of 1993, the township government campaigned in the villages to grow tobacco. they promised that they would buy all their produce at a fixed price and seeds would be given free to interested growers. They also promised to give the coal on credit. ( l he coal is used for fuel for the drying facility). Further, the township was willing to provide fertilizer, pesticides and plastic films on credit.
Encouraged by the prospects of tobacco growing, Ms. Yuan's family decided on engaging on such activity in March 1993. They invested their earnings from duck raising into the project. In addition. Ms. Yuan applied and got a loan from the women's group.
Her husband constructed 2 drying facilities and he got coal for the facility from the township.
Her husband chose the sloping areas for tobacco growing. Since March until the succeeding tour months, the township technician provided him technical advice and has been visiting them frequently. He was able to learn the skills and technological requirements.
His whole family assisted him in the undertaking, including his wile. But since they couldn't do the planting alone, they hired 10 workers to finish the work in one day. For harvesting, they will have to hire again 10 workers. He estimates his harvest will be the highest in the village.
He carefully followed the technical advice on growing tobacco. He obtained on credit from the township the recommended plastic film, fertilizer and pesticides in the amount the recommended by the technician. He also acquired on credit (i.e. to be deducted from sales proceeds) the initial ton coal for drying.
The rest of the farmers in the village did not harvest the same level as he did. In fact. some of them were not able to harvest anything at all. The villagers accounted this was due to the heavy rains in the past months. As most of them grew the tobacco in the plain areas, most of their fields got flooded.
However, when he sold part of his first harvest to the buying station, he found out that the price dropped considerably. The price was way below the price the township had promised to pay. With the new price. the gross sales of the harvest will be far less than expected and he expects a net loss of 170 rmb. He cannot sell to any other buying station since it is the only one licensed by the township to procure tobacco. Neither can he sell it directly to the tobacco factory.
Another problem is that he needs to harvest the remaining standing crops soon so that it will not lose quality. But to do that, his fuel requirements (coal) must be ready. He needs another 3 tons of coal. Before, the township allowed him to have the coal on credit, but now he has to buy it in cash.
Both husband and wife did not keep any financial records. He said he can remember every transaction accurately. However he could not give exact estimates on how much he actually invested. He mixed the accounts of the sugarcane and tobacco production. In the end Ms. Yuan was not able to repay her loan to the group.
Task
1. Analyze the internal and external factors that affect this micro-enterprise, using the format of Visual Aid 1-4.
2. Is this a good project for Ms Yuan Wan, Ti to become more self-reliant? If so, wins, how?
Yuan Wang Ti's Tobacco Production Factors Affecting the Success or Failure of Business
Output Task 1
Internal Factors |
External Factors |
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Business Stage |
Strengths |
Weaknesses |
Opportunities |
Constraints |
A. Planning Stage |
||||
Production |
· farmer, trainable |
· does not yet know tobacco growing |
· technician will provide advice |
|
· land available |
· inputs available on credit |
|||
Marketing |
· no market investigation |
· township will buy |
· no other buyers known | |
· relied on government information on pricing |
· no contract | |||
Financial |
· own savings |
· did not estimate well loan from women's group available |
||
· price change not anticipated |
||||
Organization |
||||
B. Implementation |
||||
Production |
· good farming skills |
· inputs no longer available on credit | ||
Marketing |
· can not negotiate higher price |
· no other buyer | ||
· buyer dictates price (price dropped) | ||||
Financial |
· mixed accounts |
|||
· no more cash for input requirement |
||||
Organization |
· no decisions by wife |
Output Task 2
Undertaking of this micro-enterprise does not strengthen Ms Yuan Wang Ti's self reliance, primarly because it is not she who is in control of the business, but her husband
· she does not make decisions about the use of the loan nor about the management of the enterprise
· she does not learn any new skills
· she can not repay her Ivan to the group and has not made any personal achievements, which may erode her self confidence
· she does not have her own income and is us (or even more ) dependent on others as before
· there is no break through in traditional thinking
