Recent orders
the success of James Dyson, a UK based entrepreneur and founder of Dyson Appliances Ltd (DAL)
Evaluation Of An Entrepreneurial Venture: Dyson
Introduction
This report deals with the success of James Dyson, a UK based entrepreneur and founder of Dyson Appliances Ltd (DAL). Dyson is famous for designing the Dual Cyclone bagless vacuum cleaner that functions on a theory of cyclonic separation. With a staggering growth of 300% and a presence in more than 45 countries worldwide, Dyson’s net worth currently is £3 billion (Cozon, 2013). In less than four years, Dyson managed to become a market leader, as regard sales in vacuum cleaners, both in the US and UK markets, which clearly shows its success story. However, the journey that started with launching the Ballbarrow in the 1970s to the production of the extremely successful vacuum cleaner in the 2000s has been a rather difficult one that involved struggles in procuring funds during the initial years to fighting court cases against multinational rivals for patenting rights. Despite these major setbacks, Dyson persevered, and transformed his company into a market leader, amidst stiff competition from large multinational brands. Dyson is considered as a great entrepreneur and his sense of innovation and business acumen is evident in his marketing a product that used a technology rejected by other product manufacturers. The product when launched was priced at double the average market rates for similar products and there were very little advertisements and marketing done to promote it; instead, DAL commissioned retailers through their own efforts, an occasional article that described the product was published in newspapers, and the name was made to spread by a general word of mouth.
Discussion
Delineating the terms ‘entrepreneur’ and ‘entrepreneurship’
In the last two decades, policy-makers have acknowledged that that small business enterprise play a significant important role in promoting industrial growth and increasing job opportunities (Deakins, and Freel, 2009; Burns, 2011). Reviews showed that in the US, small firms with fewer employees (less than 20), created a large scope for new job opportunities (Birch, 1979). These figures later encouraged the UK government (under Thatcher) to establish a form of ‘enterprise culture’ that encouraged innovations in the field of business and management (Bridge, O’Neill, and Cromie, 1998). This interest by the government was reflected in the form of enhanced focus on innovation and entrepreneurship in the last two decades, in the context of promoting small business firms (Chell, Nicolopoulou and Karatas-Ozkan, 2010).
To delineate an entrepreneurial person some specific characteristics, skills and behaviours are generally associated with that person. Characteristics include perseverance, resourcefulness, confidence, goal oriented and adaptability; skills include ability to make decisions, solve problems and negotiate; and behaviours include creativity, opportunity seeking, and dealing uncertainties and setbacks (Gibb, 1999).
Stevenson and Sahlman suggested, “Entrepreneurship is the relentless pursuit of opportunity without regard to resources currently controlled” (1989, 104). In another definition Stevenson and Jarillo stated, “[It] is a process by which individuals – either on their own or inside organisations – pursue opportunities without regard to the resources currently controlled” (1990, 23). Later Chell claimed that the process of entrepreneurship involves “recognising and pursuing opportunities with regard to the alienable and inalienable resources currently controlled with a view to value creation (2007, 18). From the above definitions, it is evident that entrepreneurship is a process where a business venture lacks full control over the available resources. In this context, it must be kept in mind that resources do not merely relate to economic terms, but include social and human capital (Barringer and Ireland, 2012). Additionally, to act as an entrepreneur, one must work in a venture that creates and adds value. Besides these, entrepreneurs generally have a strong network, which they use for procuring social capital and creating a wide scope for turning their objectives into reality (Chell and Baines, 2000). Taking into consideration the definitions of entrepreneur and entrepreneurship, as provided by various experts, this paper will now analyse Dyson’s entrepreneurial venture, the DAL.
The entrepreneurial venture by James Dyson, DAL
Before the innovative designing of the bagless vacuum cleaner, James Dyson had already established himself as an entrepreneurial businessperson and a designer. He had already designed the “ballbarrow,” a wheelbarrow fitted with a ball-shaped wheel that changed the entire market, by simply replacing the wheel with a ball (Roy, 1993). This innovative venture later formed the financial foundation for his venture into bagless vacuum cleaner. The experience he gained while working on this particular venture taught him many lessons, especially in the context of business strategy, managing innovation and protection of intellectual rights (Dyson, 1998). Here one particular experience is worth discussing. Dyson had designed the ballbarrow while working with an engineering firm called Rotork. He moved out of this firm eventually, but in the process lost all patenting rights, which was in the company’s name. This experience taught Dyson how to protect his intellectual and patenting rights, where all future patenting would be in his name and not that of any business firm (Dyson, 1998).
The leading share in the market of vacuum cleaners, prior to Dyson’s invention of the bagless type, was held by Hoover that had designed a vertical cleaner functioning on rotating brushes, and known as Hoover Junior this was the UK’s highest selling brand in vacuum cleaners. Almost all vacuum cleaners until the 1980s were variations of the Junior, with minor changes in design. A revolutionary change appeared in the market during the 1970s and 1980s, when Dyson designed a new vacuum cleaner that functioned on the principle of cyclonic forces, and did not have a bag that were used in all prior models to assemble the gathered dust.
After creating the innovative design, Dyson used his experiences from his previous other products, especially the ballbarrow, to plan a marketing strategy for his product, wherein he first ensured all patenting rights were secured before starting negotiations (Dyson, 1998). This is an important step in strategic innovation and management, where an entrepreneur in order to protect his intellectual rights from powerful multi-national firms, must secure patenting rights to prevent any future sabotage or theft (Hart, Fazzani and Clark, 2009). However, Dyson in his book mentioned that despite all necessary precautions, from his previous experiences he was almost sure that the corporate giants would aim at stealing the design from him, regardless of all protection taken (Dyson, 1998).
While trying to market his innovation, Dyson was willing to accord a licence to production companies with special rights to patenting, and as takings, Dyson asked for a certain percentage from the profits made on product sales. In this instance, Dyson’s strategy aimed at offering a license for five to ten years, along with 5% royalty on overall price and an immediate down payment of £40,000 (Dyson, 1998). Furthermore, Dyson was willing to help creating the product from its original design. However, the leading manufacturers of vacuum cleaner at that time, such as, Electrolux, Hoover, Vax, Black and Decker, amongst many others refused to take his offer, and instead some focussed on finding defects in his design (Dyson, 1998). In some cases, the MNCs expected him to give all patenting rights for a meagre compensation. Sometimes Dyson faced difficulties while agreeing to negotiate, owing to the issues of protection of intellectual rights that would inevitably arise during negotiations with the designing experts of the concerned MNC (Dyson, 1998).
Despite this major setback, which made things difficult in the UK and Europe, Dyson persevered, and he soon found a way to enter the Japanese market. After many weeks of negotiation, Apex Inc. finally agreed to procure a licence to make and sell the product (with the name G-Force) in Japan. The procurement of licensing to his product technology by the Japanese firm coupled with Dyson’s negotiating skills and perseverance, helped him to garner the much needed revenue during late 1980s (Dyson, 1998). This revenue also gave him the self-confidence to initiate strategic planning towards establishing production facilities in his own country.
With the small income coming in from the Japanese market, Dyson decided to target markets within the UK. Since all appliance-producing firms had previously rejected his offer Dyson devised a new marketing plan, wherein he decided to offer his product to the UK contract manufacturers (Dyson, 1998). Next, Dyson opted to offer serial contracts to two separate manufacturing companies, where one firm would only create components and the second one would to do the assembling. However, here Dyson faced another setback, where the two firms chosen by him created certain problems. He did not accept the quality of the product manufactured, and found that the firms were placing his work in-between other old contracts, thus not giving the attention necessary to manufacture good quality products. To deal with this setback, Dyson took a major decision, where he decided to produce and assemble all by himself. He started by buying moulds from moulding firms and tried building his own factory (Dyson, 1998). However, here he faced more difficulties, related to procuring adequate funds. He discovered that getting a financial loan, even with a successful business product was extremely difficult. To overcome this problem, Dyson looked at the setting up his factory in places where governmental grants were possible, but David Hunt, a Welsh Minister, rejected his application (Dyson, 1998). By this time, more than a decade had passed and he had spent nearly £2 million. Finally, after a long negotiation, Dyson managed to convince his local bank into granting him a loan, which allowed him to establish his production unit in Wiltshire, and finally the first bagless vacuum cleaners came into the UK market in 1992 (Dyson, 1998). From the review, it is clear that Dyson exhibited many of the characters, skills and behaviours given in the various definitions of entrepreneurs. He exhibited perseverance and self-confidence even when his plans failed to take-off, he remained goal oriented despite constant failure and stiff opposition; he was able to make strong decisions that involved taking risks to some extent. He was oriented towards problem solving, and was a successful negotiator, which is evident in his dealings with the Japanese firm and later the local bank. Besides these, his designs showed creativity, he made use of all possible opportunities, and was adept at dealing with setbacks and uncertainties.
After the manufacture of first series of the bagless vacuum cleaners (DC01), James Dyson started visiting famous retailers, such as, Comet and Dixons to procure order for sales. Once again, Dyson met with a failure. The retailers failed to understand why consumers would buy a machine that was three times more expensive than any other vacuum cleaner already present in the market. Finally, few home catalogue firms decided to feature the cleaner in their product lists, while a Midlands electric store decided to stock them. The sales picked up very slowly but later showed a constant rise, and finally the John Lewis store decided to stock the innovative cleaners. After this, product sales showed a rapid rise, and the company soon turned into one of the market leaders, in the arena of vacuum cleaners.
James Dyson adopted a new concept in sales and marketing, where no advertisements were made to promote the product, which was another major risk, taking into consideration the hurdles faced previously (Janney and Dess, 2006). In this context, Dyson maintained that being product orientated, he always felt that with good quality products promotional works are not an absolute necessity (Dyson, 1998). Therefore, despite using a completely new technology, he did not spend large amounts on advertisements and relied only on a handful of press releases and print features.
As Dyson sales rocketed, large brands like Hoover, Miele and Electrolux saw a steady fall in their sales. These business giants tried fighting back by designing their own versions of bagless vacuum cleaners, and soon Hoover developed their Triple Vortex vacuum cleaners, which removed the use of filters. Dyson however filed a case, where it was claimed, the technology used by Hoover was an infringement on Dyson’s patenting rights. From a Financial Times report we find that “The company won a 2000 High Court injunction to ban the sale of Hoover’s bagless Triple Vortex vacuum cleaner, and subsequently accepted £4m in damages” (Wembridge, 2013), thus procuring a major win for the company. Dyson later faced many legal fights with large MNCs, over standards in advertisements and infringement of intellectual and patenting rights. In 2000, there was another ruling in favour of Dyson, where the Advertising Standards Association (ASA) awarded a verdict against an advertisement by Electrolux, which showed that the firm had the most powerful vacuum cleaners. The ruling clearly stated that motor power does not reflect better performance of vacuum cleaners (Sunday Times, 2000). According to the Financial Times report “[Dyson has] spent more than £2m in 2012 on filing and securing its IP rights, as well as £3.2m defending the “air multiplier” technology in some of its fans. In its 20-year history, Dyson has dealt with more than 750 legal issues involving alleged breaches of its IP, most of which have been settled out of court. The company is currently involved in 13 legal battles over IP, excluding those in China, where misuse of patents is widespread” (Wembridge, 2013).
When Dyson entered the US markets in 2002, he decided to adopt a new marketing strategy, where he did not apply for any intellectual property protection, and simply relied on the brand name and image. Currently Dyson is “the top selling upright vacuum cleaner brand in the US, with a near 27% market share” (BBC Business News, 2012). Dyson used a marketing strategy in the US that was different from the UK/Europe strategy, wherein a successful advertising campaign worth millions of dollars was used. In Japan, Dyson became the third largest name in vacuum cleaners after overtaking Toshiba, and here Dyson strategically made an innovation in the name of Dyson DC12, specially designed for consumers in Japan. Owing to the huge success in Japan and the US markets, the company “turnover was £1.05bn, up from £887m in 2010 [and] its earnings grew by 30% in 2011 to £306.3m… Dyson has been increasing the amount of products it sells outside the UK. Last year it sold 85% of its machines outside the UK, compared with 30% in 2005…[furthermore] Dyson – which now employs nearly 4,000 people worldwide – also said that it planned to increase its spend on research and development by 20% over the next five years” (BBC Business News, 2012).
From the above review, it can be suggested that besides designing a revolutionary technology, Dyson had used various innovative marketing strategies that varied according to the needs of the targeted market. His perseverance in face of constant failures and setbacks, his self-confidence, his sense of conviction in his own invention, and his ability to make decisions and negotiate, made his entrepreneurial venture a complete success, despite lack of promotional advertisements and a stiff competition from powerful multinational brands. The process of entrepreneurship, as derived from the above case study, appears as a persistent pursuit and seizing of opportunities, regardless of the resources that remain under the entrepreneur’s control, and it is in sync with the definitions provided by the experts.
References
BBC Business News, 2012. Dyson sales and profits boosted by US and Japan. Accessed 17th
November 2012,
http://www.bbc.co.uk/news/business-19515485Barringer, B., and Ireland, R., 2012. Entrepreneurship (4th ed.). New Jersey: Pearson
Prentice Hall.
Birch, D., 1979. The Job Generation Process. MIT Study on Neighbourhood and
Regional Change, Vol. 302. Washington DC: U.S. Department of Commerce.
Bridge S., O’Neill, K. and Cromie, S., 1998. Understanding Enterprise, Entrepreneurship
And Small Business. London: Macmillian.
Burns, P., 2011. Entrepreneurship and Small Business (3rd ed.). New York; Palgrave
Macmillan.
Chell, E., Nicolopoulou, K. and Karatas-Ozkan, M., 2010. Social entrepreneurship and
enterprise: International and innovation perspectives. Entrepreneurship and Regional
Development, 22 (6), 485-493.
Chell, E., 2007. Social enterprise and entrepreneurship: Towards a convergent theory of the
entrepreneurial process. International Small Business Journal, 25(1), pp.3-19.
Chell, E. and Baines, S., 2000. Networking, Entrepreneurship and Micro-business
Behaviour. Entrepreneurship and Regional Development 12(3): 195–205.
Cozon, I., 7th April 2013. The Sunday times rich list 2013. Accessed 16th November 2013,
http://www.thesundaytimes.co.uk/sto/public/richlist/article1240671.eceDeakins, D. and Freel, M., 2009. Entrepreneurship and Small Firms (5th ed.). Maidenhead:
McGraw Hill.
Dyson, J., 1998. Against the odds. London: Orion Books.
Gibb, A., 1999. Can we Build Effective Entrepreneurship Through Management
Development? Journal of General Management 24:4, pp. 1-21.
Hart, T., Fazzani, L. and Clark, S., 2009. Intellectual Property Law (5th ed.). New York;
Palgrave Macmillan.
Janney, J., and Dess, G., 2006. The risk concept for entrepreneurs reconsidered: new
challenges to the conventional wisdom. Journal of Business Venturing Vol: 21, pp. 385 –
400.
Roy, R., 1993. Case studies of creativity in innovative product development. Design Studies,
14(4), pp. 423–443.
Stevenson, H., and Sahlman, W., 1989. “The entrepreneurial process.” In P. Burns and J.
Dewhurst (Eds.) Small Business and Entrepreneurship, Houndsmills: Macmillan
Education.
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management. Strategic Management Journal, 11: 17–27.
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Wembridge, M., 2013. Dyson sues Samsung over ‘rip off’ vacuum. The Financial Times.
Accessed 17th November 2013,
http://www.ft.com/intl/cms/s/0/a76bee9a-1a14-11e3-b3da-00144feab7de.html#axzz2l169vHiG
The Subject Matter of Economics and the Role of the Division Of Labour in Defining this Subject Matter
The Subject Matter of Economics and the Role of the Division Of Labour in Defining this Subject Matter
Author’s name
Institutional Affiliation
Table of Contents
TOC o “1-3” h z u Introduction PAGEREF _Toc316113969 h 3The Role of the “Division of Labour” In Defining the Subject Matter of Economics PAGEREF _Toc316113970 h 4Conclusion PAGEREF _Toc316113971 h 5References PAGEREF _Toc316113972 h 6
IntroductionEconomics may be defined in a multiplicity of ways. In the 19th century, it was characteristically described as the science of exchangeable wealth. Later in the 20th century, it has characteristically been defined as a science that investigates the allocation of limited means in the midst of contending ends. The subject matter of economics entails the production as well distribution of output. In the perspective of this paper, the subject matter of economics may be defined as the science that investigates the generation of wealth in a structure of division of labor. This means the creation of wealth in a system whereby the individual lives by what they produce, or assisting in the production. The produce is subsequently distributed by the labor of other workers. The rationalization of this definition becomes clearer in the investigation of the role of division of labour in the generation of wealth and its distribution (Acharya, 2000).
The significance of economics is derived from the specific significance of wealth. This entails well-being, human life, and material goods. The function of wealth in relation to human life is acknowledged on a common-sense foundation. Evidently, human life is dependent on clothing, food, and shelter. Furthermore, experience demonstrates that there is no limitation to the magnitude of wealth that individuals’ desire. It is also evident that the greatest amount of their working hours is essentially spent in labor to attain it. This means, in efforts to make a living. Hitherto the significance of wealth, by itself, is insufficient to determine the significance of economics (George, 2008).
The Role of the “Division of Labour” In Defining the Subject Matter of EconomicsThe wealth production fundamentally depends on division of labor. It is essential to note that the division of labor is an integral characteristic of all highly developed economic systems. It inspires basically all of the gains ascribed to technological advancement and the utilization of machinery and improved tools. Its existence is requisite for a rising and high productivity of labor, meaning the output per unit of labor. Similarly, its absence is a foremost characteristic of all backward economic systems (Acharya, 2000). Division of labor introduces a level of complexity in economic life that necessitates the existence of economics. This is because the division of labor involves economic phenomenon existing on a scale in time and space that makes it unattainable to comprehend them through personal observation and experience only. Economic life in a system of division of labor may be understood only through an organized science that proceeds through deductive reasoning from basic principles. This is the endeavor of the science of economics. Division of labor is therefore, the fundamental fact that demands the existence of the subject matter of economics. Despite its imperative significance, division of labor is a relatively topical phenomenon in history.
What makes the subject matter of economics necessary and imperative is the actuality that whereas human life as well as well-being is dependent on the generation of wealth, and the generation of wealth is dependent on the division of labor, division of labor cannot function or exist automatically. The functioning of division of critically depends on the institutions as well as laws that a country adopts. A country may adopt institutions and laws that facilitate for the growth and flourishing of the division of labor. For instance, in Canada, it is within the law to seek for a lucrative job although the prospects of getting one may be unequally distributed. A country may adopt institutions and laws that frustrate the growth and flourishing of division of labor. An example would be the nation of South Africa during the apartheid regime. Indeed, work availability as well as the wages paid is issues of fundamental concern. Thus, the significance of the subject matter of economics embraces contemporary material civilization. In the absence of the widespread division of labor, the production of contemporary vaccines and medicines, the provision of contemporary hygiene and sanitation, as well as production of sufficient food supplies would be impossible (Acharya, 2000).
While consumers would perceive that they make free choices in regard to their purchases, such a notion is entirely questionable in regard to production. It should be understood that production embraces combined efforts in two regards. Firstly, companies focus in the production of specific commodities. This implies that owners and workers of a furniture company can only obtain clothing through exchange. In this perspective, the furniture and clothing companies are reciprocally dependant on one another. Therefore, the specialization of different companies in the production of particular commodities goes together with the materialization of market exchange amongst the economic sectors. Market exchange would be impossible if individuals produced all they required. Secondly, not only is division of labour existent between companies specializing in the production of diverse commodities, but also within every company. Division of labour in companies is evident where the workers, under the authority of the managers and owners, specialize in specific tasks (George, 2008).
ConclusionIn investigating the role played by the division of labour in the subject matter of economics, in is essential to note that, production is a shared process in which producers specializing in the production of specific commodities, execute specific tasks. This means that, production mainly addresses the issue of who does what, while distribution deals with who acquires which portion of the jointly generated wealth. ReferencesAcharya S. (2000). Marx & the Division of Labor, Chicago: University of Illinois Press.
George, B. (2008). Labor Economics, New York: McGraw-Hill.
A study on the impact of Risk management strategies on the sustainability of projects A case study of rural based water proje
A study on the impact of Risk management strategies on the sustainability of projects A case study of rural based water projects in Machakos county
By
GLADYS NDINDA MWANZA
August, 2015.
BACKGROUND OF THE STUDY
Sustaining of projects is a major challenge in developing countries. Several projects that have been implemented with large sums of money tend to experience serious challenges of sustainability. The issue has become a major concern for most donors such as the African Development Bank, the World Bank, and USAID, the Asian Development Bank, the African Union and the Economic Community of West African states. organizations that proactively identify and manage risks tend to be in a better position to seize opportunities,Kerzner,(2009). This applies to managing sustainable development opportunities and risks, which include environmental, social, and economic issues. Integrating sustainable development opportunities and risks into an existing framework and strategy should allow for a better understanding of their relationship to an organization’s business goals and other activities. A good measure of whether sustainable development is embedded into organizational operations and general good management is the extent to which an organization among other factors such as being accustomed to social and environmental sensitivities and recognizing opportunities for improving its financial performance inteligently manages risks. As a strategy towards poverty reduction in many developing countries, efforts such as allocation of Social Development Funds, Constituency Development Funds and donor funds to facilitate initiation of income generating projects for the target communities have been evidently adopted. Interested stakeholders such as Non-governmental organizations, Churches, government and individual of good will have come up with seemingly healthy ideas.
It however seems that the problem of poverty still continues to exist as majority of these projects cease to exist immediately the source of funds are pulled out,(Bigio, 2009).One of the major challenges of rural based water projects is that of limited sustainability Thioune, (2003) (where the present context for strategy development is one of isolated groups and individuals) or completely lack of sustainability (where stakeholder isolation within strategy development process is likely to be the norm for the foreseeable future).The features of sustainability in projects as noted by Danilov,( 2009) are categorized into ;Social indicators referring to the quality of amenities and facilities in place for human rehabitation, level of education, health and safety standards for example longevity prospects,child birth and child mortality up to age of five years .Ecological indicators which include protection of the atmosphere as indicated by greenhouse emissions, measures of preventing desertification, and deforestation, rational land use, maintenance of biodiversity, ecologically safe managements of radioactive waste and sewage. Economic indicators refer to financial resources and mechanisms, per capital GDP index, consumption patterns including energy use and cooperation transfer of environmental sound technologies .Institutional indicators: Intended to reflect on one hand state of policies on sustainable development and on other hand involvement of key population strata in the development process. It includes such issues as presence of national programs for transition, implementation of global accords on sustainable development and numbers of internet users per a thousand people.
Sustainability challenges as indicated by Bigio, (2009) include lack of sustainability maintenance culture , poor community participation, management problems, poor project goals , more
preference to provision of local quick jobs at the expense of employee competence and environmental issues.
In the context of project management, risk management entails, planning how risk was managed in the particular project, assigning a risk officer, maintaining live project risk database, creating anonymous risk reporting channel, preparing mitigation plans for risks that are chosen to be mitigated and summarizing planned and faced risks. The importance of risk management ranges from attaining sustainable project that consequently reduces poverty levels through increased income to the community. The strategies for risk management as indicted by Marks, (2007) include, Risk avoidance; failing to carry out an activity that could carry risk, Risk reduction or “optimization” involves reducing the severity of the loss or the likelihood of the loss from occurring, Risk sharing with another party the burden of loss or the benefit of gain, from a risk.’ and the measures to reduce a risk and risk retention is accepting the loss, or benefit of gain, from a risk when it occurs. Though hardly emphasized, the relationship between risk management strategies and sustainability of rural based water projects cannot be overlooked thus creating the need to undertake this study.
While studies on strategies for project sustainability have mentioned various causes of project sustainability, the relationship between risk management strategies and sustainability of projects is hardly emphasized by majority of authors. According to Douglas, (2009) Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of
uncertainty on objectives, whether positive or negative) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risks can arise from uncertainty in financial markets, project failures (at any phase in development, production, or sustainment life-cycles), legal liabilities, credit, accidents, natural causes and disasters as well as
deliberate attack from an adversary or events of uncertain root-cause, Douglas (2009).
STATEMENT OF THE PROBLEM
Project sustainability is a major challenge in many developing countries. Large number of projects implemented at huge costs often tend to experience difficulties with sustainability. More than a third of Rural based water projects fail within 3 years of development. Construction of this water projects doesn’t help if they fail shortly after being implemented. All major donors, such as the World Bank, USAID, UNDP, Asian Development bank and the bilateral aid agencies have been expressing concerns on this matter. This means that while huge expenditures are being incurred by these countries in implementing projects, poor sustainability is depriving them from the returns expected of these investments. With this the debts from development expenditure are increasing and gains from these expenditure have either not been forthcoming fully or been accrued at a lower rate. Failure of the project leads to wastage of both human and financial capital invested in the project. With this rationale people living in rural areas continue to languish in poverty due to high failure and unsustainable of water projects..The problem of unsustainability has been highly discussed cited several reasons as the cause of the unsustainability but the subject of risk management strategies hasn’t been mainly discussed. A study by Bigio, (2009) show that many business related projects in rural areas are faced with sustainability challenges due to inability to intergrate risk management strategies in their project cycles. Graft ( 2003 ) further adds that it is unclear what long term commitments on the side of project initiators and community have on management of risks associated with rural based business projects. This has led to losses that could easily be avoided and consequent failure to exploit new business opportunities that may arise from risk management strategies. Risk mapping seem not to be a prerequisite in project planning and therefore not instilled as part of project design in many rural based projects Kerzner,( 2009).Studies by Derek, (2005); Bigio, (2009); Kerzner, (2009); show factors such as lack of community participation, poor project management , poor project goals ,and lack of quality training as major prerequisites for poor project sustainability in rural areas. In a study done by Wanjohi (2010) , on sustainability of community based projects in developing countries, local team leadership and financial issues were discussed as the major issues of concern affecting project sustainability. In a similar study done by Jeucken, (2004), the need to enhance projects sustainability by financial institutions was identified. Jeucken, (2004) identified environmental concerns as reasons for poor project sustainability in developing countries. He however did not discuss environmental risks that projects are exposed to and their relationship with sustainability.Optimization of the current risk management strategies is crucial for the sustainability of water projects. This therefore creates the need to carry out this study on the relationship between risk management strategies and sustainability of water resource projects in Kenya with reference to Machakos County
.
OBJECTIVES OF THE STUDY
MAIN OBJECTIVES
The main objective of this study is to at examine the risk management strategies and their impact on the sustainability of rural based water projects.
SPECIFIC OBJECTIVES
The following specific objectives will guide the study;
To examine the impact of risk reduction on the sustainability of rural based water projects
To analyze the impact of risk retention on the sustainability of rural based water projects
To establish the effects of risk transfer on the sustainability of rural based water projects.
To evaluate the impact of risk avoidance on the sustainability of rural based water projects.
To determine to what extend the risk management strategies determine sustainability.
RESEARCH QUESTIONS
What is the effect of risk reduction on the sustainability of rural based water projects?
What is the impact of risk retention on the sustainability of rural based water projects?
What is the effects does risk transfer have on the sustainability of rural based water projects?
To what extend does risk avoidance impact sustainability of rural based water projects?
How can the strategies be ranked to their influence in the sustainability of rural based water resource projects?
SIGNIFICANCE OF THE STUDY
Despite the growing innovation and investment of organization resources in project development, there have been challenges in the sustaining of these projects thus resulting to wastage of the project inputs. The lessons from this study as well as the recommendation for the future will help the management of the rural based water projects to understand the strategic and tactical ways of dealing with risk management in order to be able to sustain the projects.
Project risk managers can use this study to evaluate the effectiveness of risk management strategies in increasing the sustainability of projects.
The study will also provide the background information to research organizations and scholars who will want to carry out further research in this area. The study will also facilitate individual researchers to identify gaps in the current research in this area. It will also enable them in taking up consultancy assignments on project risk management and sustainability for client organizations.
SCOPE OF THE STUDY
The study on the impact of risk management strategies on the sustainability of rural based water projects will be conducted in Kenya with reference to rural based water projects carried in Machakos county.