DIRE DAWA UNIVERSITY

INSTITUTE OF TECHNOLOGY
SCHOOL OF ELECTRICAL AND COMPUTER ENGINEERING
COMMUNICATION ENGINEERING CHAIR
ASSIGMENT OF ENTREPRENEURSHIP FOR ENGINEERS
INDIVIDUAL ASSSIGNMENT
ASSIGNMENT TWO

PREPARED BY: BILISUMA TESHOME

ID NO: DDU1002308

SUBMITTED TO: INS. DEBOSHA A.

SUBMISSION DATE: 3-6-2022G.C

1. What are the channels of technology transfer? Explain the channels of technology
transfer in Ethiopia, in particular?

Channel technology transfer

 Technology transfer channels are various ways through which technology and

knowledge are transferred from one country (or organization) to another, especially from
developed economies to developing economies.
 Examples of technology transfer can be found across virtually every scientific and
industrial area, from pharmaceuticals and medical devices to alternative energy
solutions, computing, transport, artificial intelligence, robotics, agriculture,
aerospace, environmental improvements and many more.
 Different modes of technology transfer are foreign direct investment, sharing
technologies, licensing technology, turnkey projects and strategic alliances. We shall
discuss four channels – FDI, Licensing, Joint Ventures and strategic alliances, and
international trade.

1. Joint Venture and Strategic Alliances: Collaboration for innovation is popular

among enterprises in advanced nations as well as between developed and developing
countries. Alliances should not be created to compensate for one of the partners' or both
partners' weaknesses. Strategic relationships should never license proprietary
technologies.
Alliances must be formed when one or both sides have a distinct advantage. The most
generally recognized reasons for an alliance include the use of complementary
technologies, the desire to decrease the time required for an innovation, and market
access. Toshiba is one of the most experienced corporations with technology
relationships (a major Japanese electronics company).

2. International Trade: Import of machinery and equipment and the product may
provide an alternative to assimilate the technology.
For example: A Chinese company (SAIC Chery), the local partner of General Motors,
through reverse engineering of GM owned Daewoo’s Matiz car have offered their own
brand QQ for 30% less than the Matiz. Sony had bought transistor technology from Bell
 Laboratories at a price of $25,000, and today Sony is the world leader with no radio
manufacturers in the US.

3. Foreign Direct Investment (FDI): FDI is the most commonly used method of
transferring newer technologies. Foreign enterprises have an important role in reducing
intellectual (thought, talent) and physical capital disparities. International direct
investment aids in closing the productivity gap between foreign and domestic enterprises.
Foreign enterprises have a better understanding of global markets, production and
distribution coordination in multiple nations, and manufacturing efficiency.

Intra-firm and inter-firm FDI transfers are also possible. Thus, FDI may boost the
efficiency of host-country enterprises through direct investment as well as through
spillover advantages (through observing, copying and applying technologies). China's
development is completely owing to FDI.

4. Licensing Technology: Licensing is an older means of technology transfer than FDI.

This was a fairly popular method prior to deregulation. However, practically all states are
now keen to accept FDI. In exchange for a royalty, a patent holder authorizes a foreign
business to manufacture the product via a licensing agreement.

Licensing can be inward (using the technology for a charge) or outward (sharing
patents for a royalty). It might be an assignment (all rights to a certain patent are
transferred to the transferee) or a solitary license (rights retained by the licensor but
licenses not to be extended to third parties). Where the host country regulates imports,
licensing is more appropriate. Licensing allows the licensor to gain control of the
overseas enterprise.

The licensor retains ownership of the patents. Licensing allows the licensee access to the
developed technology while also providing the licensor with confidence that the licensee
will not become a formidable rival in the future. Licensing allows the licensor to use the
technology as much as possible before it becomes obsolete.

Channels of technology transfer in Ethiopia:

  In Ethiopia, trade, particularly imports of capital goods, is the most important
channel of technology transfer and innovation. Example, the share of capital
goods imports as a propagation of GDP increased sharply from 5.1 percent in
2000 to 13.3percent in 2005 reflecting the increasing reliance of the country on
imported technologies, particularly as export-oriented manufacturing activities.
 The country devotes a large proportion of the foreign currency earnings to the
importation of technologies. In Ethiopia, the foreign currency required to import
capital goods/ technologies is more than the total amount of foreign currency that
the country earns from exports of merchandise goods. This suggests that imports
of capital goods/ technologies are a major contributor to the country’s increasing
external debt. Interestingly, the origin of this importers has changed over the last
15 years, although whether this shift will have implications for technological
learning is not clear at this stage.

Foreign direct investment

Increasing FDI flows could boost technology and knowledge transfer in export-oriented
sectors. For many years, Ethiopia attracted much less FDI than might be expected for a
large and fast-growing economy with diverse investment opportunities in various sectors.
FDI in flows in 2000-2005 were less than 2 percent of GDP. The peak was 12 percent of
GDP in 2017 when FDI exceed $4 billion. The contribution of FDI to national fixed
investment also remained low until 2012-2013, rising after that as FDI aimed at export-
oriented activities in the industrial park increased. Since 2012, FDI inflows into Ethiopia
have grown by 50 percent per year on average, reaching $4.1 billion in 2017; much of
this investment has occurred in export- oriented manufacturing activities (UNCTAD,
2017).

However, an assessment of the impact of FDI on transfer of technology into Ethiopia is

difficult because of lack of reliable information on technology flows through FDI.

Industrial parks

An important motivation for establishing industrial park is the possibility for technology
transfer and the dissemination of knowledge in the domestic economy through linkages
 and demonstration effect. Channels of knowledge transfer from foreign firms located in
industrial parks to local enterprises include: carrying out subcontracting work or
providing input to foreign firm; joint venture between foreign and local investor; local
employed and trained in foreign firms leaving to start their own businesses or to work
with local enterprise; and skilled expatriate workers leaving foreign firms to work as
managers or technical experts in local firms (UNCTAD, 2014).

Another channel of knowledge transfer is the demonstration effect where by local firms
imitate foreign firms and acquire similar technologies and processes. However, the
impact of industrial parks on the transfer of technology through linkages and domestic
sourcing of inputs is not automatic– neither is it as straightforward as is often assumed.

2. What are the forms of business ownership in our country? What are the sources of funds
for these businesses?

The laws that regulate formation of business entities in Ethiopia are the Ethiopian Commercial
Code of 1960, Ethiopian Civil Code of 1960, Investment Proclamation of 2012 (as amended in
2014), Investment Regulation of 2012(as amended in 2014), Public Enterprises Proclamation of
1992, Cooperative Societies Proclamation of 2003, Commercial Registration and Business
Licensing Proclamation of No.980/2016, and the Commercial Registration and Business
Licensing Regulation of 2016.

 Partnerships

There are four types of partnership recognized under Ethiopian law. These are ordinary
partnership, general partnership, limited partnership and joint venture. Partnerships should be
formed by a partnership agreement and registration is a prerequisite for a partnership to obtain
legal personality. However, these requirements do not apply to joint ventures, which have no
legal personality. Partners are liable jointly and severally for the activities of a partnership
except for limited partners in a limited partnership. Partnerships are associations of persons and
usually they are not recommended for foreign investors.

 Sole proprietor
 A sole proprietor is a person who conducts a business in his/her own name with unlimited
liability. For a sole proprietor to operate a business, he/she has to obtain a commercial
registration certificate and a business license.

 Trade Representative Office

Foreign investors who are not interested in trading activities can register a commercial
representative (liaison) office and appoint a commercial representative to undertake pro –
motional activities in Ethiopia. Before starting its operation, the commercial representative
should be registered with the Ministry of Trade and get a certificate of commercial
representative.

To secure the certificate, among other things, a minimum of 100,000.00 USD has to be brought
into Ethiopia, which is expected to cover salaries and operational expenditures of the office for
a year. After the issuance of a valid certificate, a commercial representative can promote the
products and services of the principal foreign company, study projects that will enable the
principal to make investments in Ethiopia and to promote export products of Ethiopia in the
country of origin of the principal company. The commercial representative certificate should be
renewed annually. Renewal requires the transfer of a minimum of 100, 000.00 USD every year
to a bank account of the commercial representative office in Ethiopia.

Registration requirements

Registration is a requirement for companies to do businesses in Ethiopia. Operating a business

without obtaining a business license entails administrative and criminal liabilities.

The sources of fund for business in Ethiopia are:

 Crowd funding

If your business is quite small and you already have a bit of a fan base, this is a great option.
This is a sort of funding method that’s great for getting creative on their feet. The idea is that
you generate interest, get donations and the use these donations started.

You might consider crowd funding to be a springboard and once you’ve got the initial funds
it’s up to you to make it all work. But there are a lot of other business owners and entrepreneurs
competing for the kindness of strangers, so you need to know how to spread the word and
 market your idea. You probably won’t get a huge amount from crowd funding, but it might be
just enough to get your business off to a good start.

 Angel Investors & Seed Investors

These are individuals looking for promising projects to get involved in and capitalize on, and
8if your idea is good enough they may just b the key to funding your business. You’re going to
have to prove yourself to them, though. So, do your research, get started what you can afford
and work on a show stopping business plan that will blow them away. If all goes well, you
might have some excellent support.

 Partners

A partnership with another business can be incredibly beneficial in the long term if you find the
right business and manage to win them over. They can be a source of funding and support that
is very useful and you might be equally as useful to them once you get your business off the
ground. If you’ve already got your business going and are looking to take the next step, a
partner might be the answer.

3. What is the 7Ps of the marketing mix? What makes it deferent from 4Ps? Explain!

The 7Ps model is a marketing model that is an extension of the 4Ps model. Marketing mix 4P is
becoming an old trend, and therefore, marketing business need a thorough grasp of new
technologies and concepts. As a result, three additional Ps were added to the existing 4Ps model
to provide a thorough knowledge of the marketing mix idea.

The new added 3 ideas are listed in below:

 Marketing Mix Persons:

Employees are vital in marketing since they are the ones that provide services to customers. It
is critical to employ and educate the proper people to provide excellent service to clients,
whether they work at a help desk, in customer service, as copywriters or programmers, or in
any other capacity. It is critical to locate employees that sincerely believe in the products or
 services that the company develops, as they are more likely to give their best effort.
Furthermore, the organization should welcome honest criticism from employees about the
business and include their own ideas and interests that help scale and expand the firm.

 Process in Marketing Mix:

To avoid mistakes and decrease expenses, we should always ensure that the business process is
effectively established and routinely validated. It is critical to tighten up the enhancing
procedure in order to increase earnings.

 Physical Evidence in the Marketing Mix:

There should be physical evidence that the service was given in the service industry. Branding
is an example of this. For example, when you hear the phrase "quick food," you immediately
think of KFC. Nike and Adidas come to mind when you think about sports.

The difference between 7ps and 4ps:

The difference between the 4Ps and the 7Ps is in the goal we wish to attain. The expanded
marketing mix provides organizations with a better grasp of how to satisfy their consumers'
wants and expectations. Although it is frequently considered antiquated, the 4Ps model is a
crucial tool, especially for small enterprises who sell a "standard" product. When our company
is specialized in offering a service or a highly differentiated product, we should use the 7Ps
approach. In this scenario, customer happiness is shaped by the client experience and the level
of after-sales service.

It is also worth noting that the 7Ps helps firms in reviewing and defining significant concerns
that impact the internet marketing mix for all sorts of enterprises. The development of e-
commerce and digital transformation has added new dimensions to how people locate and
purchase things. The consumer's choices are no longer passive, but rather discerning and
demanding. The 7Ps model provides the appropriate framework in this regard, shifting from a
company-centric to a consumer-centric approach owing to the three extra factors.

4. What are the types of insurance and insurance companies operating in Ethiopia?

Under Ethiopian law, there are three types of insurances;

1. Insurance against damages

2. Insurance of liability for damages and

3. Insurance of persons

1. Insurance against damages

The most common risks that a person faces could be danger of making loses as a result of fire
incidences; injury and damages could arise as a result of automobile accidents, the possible
dispensation of property by arsonists, or thieves, and so on.

Insurance against damages or Property Insurance protects the insured from the loss caused by
damage or destruction of physical property. This category of insurance covers losses caused by
an accident or negligence that damages one’s personal property.

The purpose of all Property insurance against damages is indemnification- that is a technical
term for compensation. It means that the person who makes the loss recovers back what he has
lost.

2. Insurance of Persons
Insurance of Persons means that such persons are indemnified against any risks arising from the
death or injury to persons. Injury may also mean an illness that prevents the insured person (or
policyholder) from functioning fully.

According to Article 654 of the Commercial Code the contract for the insurance of persons
cannot be considered as compensation because compensation means paying a person equal to his
loss, and because you cannot place a monetary value to human life, such contracts are freely
fixed, as per the negotiation between the insurance company and the policyholder.

In the Insurance of Persons, there are two sub-categories which are Insurance for Life, and
Insurance of Death.

There are two partly unsolved questions:

 What if the policyholder commits suicide? Article 699 states that the provision “shall be
of no effect.” In other word, it becomes null and void.
  What if a beneficiary kills a policyholder? If a beneficiary kills the policyholder, he loses
his share. Other beneficiaries, however, shall get their share of the estate.

3. Insurance of Liability for Damages

In this category of Insurance, a person who realizes that he could cause damage to others as a
result of going about his daily business may sign a contract with an Insurance Company such that
in the event of such damages, he may then call open the insurance company to pay damages to
the injured party.

Article 685 of the Ethiopian Commercial Code states that “The insurer who ensures a liability for
damages shall not pay compensation until a claim is made against the policyholder with a view
to amicable and settlement.” That means the injured must make a valid documented claim,
probably of a legal form.

This category of Insurance policy is mostly used by corporate institutions to protect themselves
financially against loses they may cause on others, including their own workers, during the
carrying out of their daily business.

Questions that could possibly be raised include:

 What if the policyholder causes the death of a person? A person who has no life
insurance with an insurance company. How much money is paid to the relatives of the
deceased? Remember that according to the Ethiopian Commercial Code states that
payments to be made to the dead are not to be considered as compensation because
compensation means that the loss is repaid, and human life cannot be valued with money

Insurance companies in Ethiopia:

1. Awash Insurance
2. Ethiopian Re-Insurance
3. Nib Insurance
4. Nyala Insurance
5. United Insurance
6. Nile Insurance
7. Abay Insurance
8. Oromia Insurance
9. Lion Insurance
10. National Insurance (NICE)
11. Africa Insurance
12. Global Insurance
13. Tsehay Insurance
14. Berhan Insurance
15. Bunna Insurance
16. Zemen Insurance
17. Ethio Life and General Insurance (ELiG)
18. Lucy Insurance