What Is Meant by Enterprise and Entrepreneurship - Assignment Example

Name: Mohamed Course: Entrepreneurship and Innovation Tutor: Dr. Thomas Jamse Date: 11, Nov, 2010 Gap Analysis 1) What is meant by enterprise and entrepreneurship? An enterprise is a legally recognized organization that is instituted for business ventures such as providing goods and services to consumers in exchange for money. An enterprise can also be viewed as an industrious undertaking that is geared towards yielding profits. The main aim of an enterprise is to generate profit. There are different kinds of enterprises that range between the. Entrepreneurship is the act of initiating; manufacturing of products, mining, agriculture, retailing, distribution and providing services among many other business undertakings financing and managing innovations with the aim of converting these innovations into economic goods. Entrepreneurship is also the process through which individuals or entrepreneurs identify opportunities, gaps, problems or unmet needs in the market. Thereafter, the entrepreneur takes actions by innovating means that can fill the existing gaps and yield profits. The key elements of entrepreneurship are innovativeness and risk taking. Moreover, entrepreneurship can be seen as a means of self-employment that creates job opportunities and helps to bridge the gaps in the market (Timmons & Spinelli 16) 2) Why has entrepreneurship assumed global prominence in the economic language and policies? The term “entrepreneurship” has assumed global prominence mainly because the term is versatile, it not only reflects the act of starting a new business but it also extends to social and political forms of entrepreneurial undertakings. Entrepreneurship has gained global prominence due to its potential to support the growth of the economy, fill in the gaps in the market and create job opportunities. As a result, many governments have endeavored to promote, develop and sustain the culture of entrepreneurship national campaigns, by enacting legislations or policies that promote entrepreneurship and by integrating entrepreneurship into the current education systems. Consequently, entrepreneurship has assumed global prominence in the economic language and policies. 3) Are entrepreneurs born or made? Entrepreneurs are born and they can also be made. Entrepreneurship is largely about ambitions and personal traits. Over the years, programs in entrepreneurship have been established with the aim of imparting knowledge to people how they can start businesses and build up their entrepreneurial abilities. There are certain proficiencies that can be taught for instance people can be taught how to develop business plans however the basic qualities of an entrepreneur are deeply embedded in the structure of one’s personality. Hence, no matter how one gets specialized training or education the ability to implement is the main determinant of successful entrepreneurship(Timmons & Spinelli 45) The key attributes of successful entrepreneurship include positive attitude, creativity, confidence, intuition and risk taking. These attributes can barely be taught in the classroom, they are in most cases embedded in one’s personal traits. On the other hand, successful entrepreneurs can be made through exposure, experience and education. Over time, entrepreneurship programs have proved to be successful in molding individuals into successful business men and women. 4) Why are some individuals more entrepreneurial than others? Entrepreneurship is mainly about taking calculated risks. Some people are more entrepreneurial than others mainly due to their ability of taking risks and venturing into unfamiliar frontiers. Most people fear failing and making losses and as a result some are always afraid of taking risks and plunging into new opportunities. For most people, they would rather be “safe than sorry.” This attitude is one of the obstacles that prevent people from becoming more entrepreneurial. A good of example of people who are less entrepreneurial are the employed. A significant number of employed people would rather maintain their low paying jobs rather than venture into the “unknown frontier” of entrepreneurship or self employment which is likely to be more lucrative. This is mainly because employment is perceived to be safer whereas the entrepreneurial world is perceived to be uncertain and risky(Timmons & Spinelli 59). Conversely, some individuals are more entrepreneurial than others mainly because they do not allow themselves to be inhibited by the fear of failure. Such people identify opportunities and take risks by investing their resources in turning the identified opportunities into worthwhile and profit yielding ventures. 5) What are the main differences between large firms and small firms? Small firms are in most cases privately owned and operated with a relatively small number of employees and a low sales volume. The ownership of small firms is mainly through sole proprietorship or partnership. In comparison to large firms, small firms have less annual sales, net sales and the value of their assets is relatively minimal. Often times small firms are not dominant in their niche market since most large firms dominate the market. Small firms can be started on very low costs and their operations can be on a part time basis. Large firms on the other hand, require large starting capital and their operation have to be regular so as to maintain their niche in the market. In small firms, the frequent cause of bankruptcy is poor planning and undercapitalization. Whereas in large firms the main cause of bankruptcy are the global economic conditions. Large firms are in most cases large business corporations owned by the government, individuals, families or cooperatives. Large firms tend to have a large number of employees and higher sales volumes as compared to small firms. Due to the enormous contributions that large firms bring to the economy, these firms at times have influence over the governments in regards to issues such as trade policies, tax policies, labour policies and foreign policies. The common marketing strategies used by small firms include, networking, word of mouth, directories, customer referrals, yellow pages and radio among many other techniques. Small firms employ these marketing strategies mainly because they cover a small market range and other means marketing are expensive. On the other hand, large firms use marketing strategies such as the use of television, radio, outdoor billboards, print media, email and the internet to market mainly because they cover a wide market range and they can meet the expenses of these marketing strategies (Timmons & Spinelli 164) 6) What is a business plan? List its key elements A business plan is a formal statement comprising of a number of business goals, proof on the attainability of these goals and a detailed plan on how these goals are going to be achieved. Business plans aid in decision making, they also help to determine the strategies, framework and direction that a business should take. The key elements of a business plan include an executive summary of the business, a business description, an environment analysis, market analysis, competitor analysis, a financial plan, an operation plan and the potential pitfalls. In a business plan an executive summary comprises of a summary of the general details mentioned in the business plan. A business description in the business plan gives a brief preview of what the business is about. Environmental and market analysis section in the business plan are evaluations of the external conditions and forces of influences that pertain to the growth and survival of the business. While competitor analysis section in the business plan depicts an evaluation of the potential competition in the alleged market. A financial plan is essentially a budget for the business. An operation plan in the business plan provides guidelines on how the business will get its products or services out in the market. Lastly, the potential pitfalls section in the business plan discuses the risks and challenges that the business could face in future. 7) What are the main practical problems associated with gathering the necessary information in business plans? A common practical problem that one is bound to encounter when gathering the necessary information in business plans is uncooperativeness from people. For instance, when looking for information in regards to the market performance some companies or people might be unwilling to disclose the relevant information. Some people could also give out the wrong information concerning a particular subject. This in turn inhibits one from establishing the facts concerning a certain market or industry. Obtaining trust worthy information when gathering the necessary information is a challenge since recipients might exaggerate the facts so as to suit their personal interests. Moreover, the methods of evaluating the information gathered are often times ineffective when it comes to providing clear and concise information. Methods of gathering information in business plans such as interviews, surveys, statistical analysis can be expensive and time consuming (Timmons & Spinelli 306). 8) What is the difference between franchising and licensing? Franchising is a business arrangement that enables the model, innovation and reputation of a business or innovator (franchisor) to be used by another party (franchisee) to conduct business and make profits. Licensing is a business arrangement that gives exclusive rights such as a design or a trade mark thus preventing other businesses from using the same trade mark. Franchising agreements involve obligations revolving around technical aspects, monitoring and training for both parties. Conversely, licensing agreements have no censures this in turn enables the licensee to use, modify, and sell a product without any regulation or obligation (Timmons & Spinelli 212). 9) What is difference between social and commercial entrepreneurship? Undertakings in social entrepreneurship are embedded on social purposes, social entrepreneurships entail recognizing social problems in the society and thereafter employing entrepreneurial principles to solve these problems and bring about social change. Whereas, social entrepreneurs focus on building social capitals, attaining environmental and social goals, the main focus of commercial entrepreneurship is on returns and profits. Commercial entrepreneurs institute business ventures by identifying opportunities or gaps in the market thereafter they turn these opportunities into industrial undertakings that will bring money. In most cases social entrepreneurship are non-profit and voluntary and are geared towards promoting the well-being of the society. On the other hand, commercial entrepreneurship is solely based on making profits. Social entrepreneurship takes the form of empowerment programs that provide education, vocational training, shelter for the needy, bursaries and small business loans. Conversely, commercial entrepreneurship takes the form of business undertaking of manufacturing of products, mining, agriculture, retailing, distribution and providing services with the aim of yielding profits (Timmons & Spinelli 86). 10) What is international entrepreneurship? International entrepreneurship entails exploiting opportunities across national borders so as to create business ventures that provide goods and services to consumers in exchange for money. International entrepreneurship can also be viewed as entrepreneurship in the international context. Due to the existing cultural awareness and technological advances, international entrepreneurs open and exploit the untapped foreign market and turn them into profitable business ventures. (Timmons & Spinelli 31). Works Cited Timmons, Jeffrey& Spinelli, Stephen. New venture creation: entrepreneurship for the 21st century. 8th Ed. New York: McGraw-Hill. 2008, p5-341. . Read More