Entrepreneurship Practice - Example

ENTREPRENEURSHIP PRACTICE By Opportunity Recognition Every business venture entails identifying a specific business opportunity that is unexploited and subsequently making the necessary arrangements to exploit the opportunity. A prospective entrepreneur exploits opportunities that have not been flooded by other competitors (Jeffrey 1994). Opportunity recognition is a deliberate process that involves brainstorming in an effort to seek new ventures that would translate to revenue to an existing or a new business venture. The business environment is such that it is constantly changing due to various socio-cultural, economic, political, and technological factors. These changes often times present different opportunities that the business owners ought to exploit in order to remain relevant and maintain the status of being a going concern. An astute businessperson is usually faced with similar circumstances that everybody faces, however they visualize something diverse. Moreover, the entrepreneur should evaluate prospective strategies and business prototypes. The entrepreneur should endeavor to carry out extensive market and financial evaluations in an effort to establish prospective opportunities. It is imperative to note that the opportunity recognition process is an ongoing process and as such, the business should constantly seek to identify new and prospective opportunities that arise with time. This strategy to reinvent constantly the business through opportunity recognition will give the business a competitive advantage over other enterprises. Timing and strategy is important in this stage since the window of opportunity has a period to it (Jeffrey 1994). Therefore, the sooner the entrepreneur seizes the opportunity the sooner he will gain a competitive advantage over other players in the industry. The business opportunity that the organization seeks to explore should be in tandem with the organizations mission, vision, and overall strategy. That is, the opportunity should not compromise the operations of the organization in that it hinders the realization of the business objectives and long-term goals. The opportunity should be such that exploiting it will make the business gain substantial gains in terms of economic advantage. Adoption of an opportunity that is not congruent with the organizations business objectives will produce suboptimal results and prevent the organization from prosperity. Opportunity Evaluation This stage enables the entrepreneurs know the kind of opportunity that will be beneficial to his/her organization. It follows the opportunity recognition phase. The entrepreneur may be faced with a number of prospective business opportunities that he/she wants to pursue. This critical stage enables the entrepreneur to choose the most probable and viable opportunity amongst the array of options available. The business owners should critically analyze the opportunities available to them and subsequently choose the most suitable one. In this evaluation, a number of useful parameters are used as benchmarks for choosing the most attractive opportunity. The evaluation should consider customer dynamics, marketplace dynamics, and the organization structure (Leifer and Harrison 1988) Customer Dynamics On the outset of any business venture, the entrepreneur should evaluate the impact the prospective opportunity will have on the target customers. A rule of the thumb puts the customer as key, therefore any strategy formulated should hinge on the interests of the customer. The business owners should evaluate the customers taste and preferences in that industry. Knowledge of customers tastes and preferences will make the business differentiate its products so that they may stand out from the competition (Hannan and Carroll 1999). Moreover, the products that the business intends to sell will fit the customers’ expectations. The entrepreneur should analyze the customer demographic factors such as age, population size, and gender when considering prospective business opportunities. It is imperative for any business owner to understand that these demographic patterns ultimately influence the customers buying trends and patterns. The efficiency or lack thereof of any business will ultimately depend on whether the business has considered these customer demographics. For instance, a prospective business opportunity in the toy market will require that the business devise strategies that suit the age specifications of that kind of market. The products that the business hopes to sell in that market should be consistent with the products that the customers in that age group expect. Moreover, the entrepreneur should keep in mind customer expectations when venturing into a prospective business field. The business products should be such that they meet the expectations of the customers in that market segment. Products that do not meet these expectations will make the organization face the risk of failure in these kinds of markets. Marketplace Dynamics It is very important for the entrepreneur to evaluate critically the market environment of the prospective opportunity. The entrepreneur should take cognizance of the market structure, available competition, price elasticity, and conditions of entry into the market (Leifer and Harrison 1988) Recognition of the available competition in the market will enable the entrepreneur to device market strategies that will put him/her at an advantage. For instance, differentiating the business products from what the competition offers to the customers. Apple for instance has differentiated its products from other computer and phone products in the market. This has given them a competitive edge over other competitors in the market. Recognition and subsequent evaluation of price elasticity in the market is integral to any prospective entrepreneur in any given market. Price elasticity refers to sensitivity of demand with changes in price. The business owners should therefore realize how the market responds to changes in price. This will enable them strategize their pricing mechanisms so that they can realize substantial gains. Every prospective businessperson should also know the conditions of entry into any prospective business. This will enable the entrepreneur strategize and design the best entry strategies that are in line with the business cost outlays (Mitchell and Clocks 1991) Organization Structure The new business should be designed in such a way that it can be able to accommodate the prospective business opportunity. It is imperative for any business to configure the business structure to match the opportunities that might be presented by the new business venture. For instance, the marketing plan should be robust enough to create visibility for the organization in the new market. The financial structure of the organization should also be robust enough to accommodate the dynamics that come with the new venture. Moreover, the business should make sure that the research and design department is robust enough to make improvements to the products so that they can have a competitive edge. Opportunity Exploitation After opportunity recognition and subsequent evaluation, the next phase should be to exploit the prospective opportunity. This entails putting in place strategies that will enable the organization realize the objectives set by the business. This exploitation requires that the organization obtains the prerequisite capital outlay to explore the opportunities that have been identified. Moreover, other important resources that will enable the organization in the exploitation of this opportunity should be employed. For instance, the right type of human resource that will be on the ground to ensure that the new business venture is as profitable as it was expected. The organization should also undertake intense research and development to produce innovative products. This will ensure that the prevailing market trends and customer preferences are sufficiently satisfied. Moreover, the organization should constantly reinvent its products through constant innovation process (Chesbrough and Rosenbloom 2002). This will make the organization have products that remain relevant in the market and subsequently have a competitive edge over other players in the industry. The opportunity exploitation phase is where the entrepreneur sets the ground rolling and seizes the new prospect. Innovation Assessment and Management Innovation is a process that is characterized by the development of new products or new services and processes (Teece 2010). The main purpose of innovation is to enable the business meet new market and customer needs. Moreover, innovation enables the business to be a step of the competitor by producing goods or services that appeal to the customers every need.it therefore follows that the effective innovation process can attained by the organization if it sets up a robust research and development department. The research and development department is tasked with carrying extensive research on the prevailing market trends and subsequently projecting the ideal solutions to problems facing the company’s existing goods and/or services. In light of the above, the innovation process has three fundamental requirements; a recognized need, available resources and technology and a financial plan. The Kline chain-linked model can be used to explain the innovation process. This model tries to expound on the complexities surrounding the innovation process. In this model, the occurrence of new knowledge is not the main impetus for the innovation process. Innovation is however thought to be a consequence of an unfilled market need (Kline 1985). This unfilled market need provides the desired push for research and development, remodeling and production and ultimately marketing. Compound feedback loops are present in all these stages. Moreover, critical feedback loops within the business and the world knowledge bases coupled with incessant novel research enables the organization to fill in the gaps (Kline 1985). Innovation assessment refers to the process through which the management reviews the organizations attitudes and perceptions on innovation. The innovation assessment process enables the organization to focus on individual’s strengths and performance and how their efforts affect the general innovation process in the organization. Other assessing the general attitudes of individual members in the organization, the assessment process also focuses on the process of innovation. The assessment looks at the drivers of innovation, the stages of innovation and the resultant effects of innovation and compared to find out whether the unfilled market needs have been filled. The assessment of innovation is a complex process that involves evaluating the impact it has to not only the existing market needs but also the impact it has within the organization and the employees. This is because innovation is not a stand-alone process but rather a process that occurs within the framework of organized relationships, systems, infrastructures and a broader socio-economic setting. Subsequently, assessing innovation requires that all these facets be reviewed in order to establish the complete picture of the impacts of the process. Environmental Analysis It is imperative to note that the business does not operate in isolation. The business operates in an environment. The business environment can be divided into two; the internal business environment and the external business environment (Wetherly and Otter 2009). Environmental analysis is a fundamental aspect to the growth and success of any business venture. Environmental analysis refers to the process through which factors in the business environment are analyzed and their influences subsequently reviewed. After conducting an environmental analysis, the management should formulate strategies that will enable the business take advantage of these factors. The environmental analysis process has four fundamental stages. These are; recognizing environmental aspects, use of environmental frameworks, choosing applicable aspects and choosing a strategic approach (Wetherly and Otter 2009). Recognizing Environmental Aspects A number of environment aspects either directly or indirectly influence the running of the business enterprise. It is incumbent upon the management of the organization to identify these aspects and critically review their influence on the business. Typical environmental aspects include tariff laws, by laws, customer and market trends, new technology, competition, environmental laws Use of Environmental Frameworks A number of frameworks have been formulated to enable the business management to identify and analyze different environmental aspects. These frameworks are meant to analyze specifically the internal and the external business environments. The internal business environment is analyzed by the SWOT framework while the external environment is analyzed by the PESTLE framework. SWOT analysis encompasses an analysis of the strengths, weaknesses, opportunities, and threats of the organization (Hill and Westbrook 1997). The PESTLE analysis comprises a review of political, economic, social, technological, legal, and environmental factors affecting the organization (Orfano 2011). Choosing Applicable Aspects It is important to note that not all aspects of the business environment are relevant to the business. Therefore, only specific aspects that influence the business substantially should be given attention. For instance, a number of tariff laws imposed may affect the business. They however do not require extra analysis as compared to the analysis on competitors. Choosing a Strategic Approach This phase ensues after the identification and analysis of various environmental aspects by use of different frameworks. This entails the management’s input in devising policies and plans that will enable the business prosper. The management should formulate the best strategy that will make the business stand out in the face of other players in the industry. Swot Analysis Strengths The business owners should evaluate their strengths. Knowing the business strengths enables the business owners to establish their influence in the market. These strengths should be unique and should give the business a competitive edge over the competitors. Weaknesses Every business has its specific challenges. These challenges place the business at a disadvantage as compared to other players in the industry. It is important for the business owners to work on their weaknesses. A business that is aware of their weaknesses is better placed in shaping their success. Opportunities This refers to the prospects that the business could venture into in order to make returns and increase their market presence. The business should constantly seek new opportunities that are profitable and viable. Moreover, the business should have a well thought out strategy that will enable it explore these opportunities. Threats These aspects could disrupt the normal operations of the organization hence affecting its profitability. The business owners should evaluate the threats hence enable them to be prepared against such threats. Often times these threats emanate from the external environment. Pestle Analysis Political Factors The business operates in a country hence the political atmosphere will ultimately affect the operations of the business. Factors such as political stability or lack of the same will ultimately influence the productivity of that business venture. For instance, a business that operates in a peaceful political environment often times performs well as opposed to that that operates in a volatile political atmosphere. Economic Factors These factors are the core of the operation of any business venture. Economic factors for instance tax regimes will ultimately affect the operation of the business venture. The structure of the economy in a country will also influence how a business is run. For instance, a business operating in a capitalist economy is different from that operating in a communist economy due to the different structures. Social Factors These fundamental factors should be given close attention by the business owners. Demographic factors like population size, age, and distribution should inform the business strategy. Moreover, other social factors like ethnicity, cultural orientation, and religious beliefs will play an integral part in shaping the business activities in terms of the kinds of goods and services that they offer. Technological Factors Technology is at the very center of the modern business world. A business that does not invest in the appropriate technology faces the risk of being rendered irrelevant in the industry (Teece 2006: Teece 1986). The world of technology is constantly changing to pave way for faster and more sophisticated technology. This is meant to improve the productivity and efficiency of business processes. Business owners are supposed to analyze the ever-changing trends in technology and make appropriate changes. Legal Factors This aspect focuses on the legislations passed that ultimately affect the running of the organization. Certain legislations passed by the state may be productive or counterproductive to the business. For instance, legislation that imposes trading quotas may prove to be either productive or counterproductive to the business depending on the situation. Acknowledging these regulations makes the business better prepared in handling its operations. Environmental Factors These matters pertain to the immediate environment. Recent developments have seen the introduction of regulations that aim to protect the environment from harm. For instance, there are regulations that ban certain emissions into the atmosphere. Failure to comply with these kinds of regulations might attract hefty fines and penalties that may hinder the operation and productivity of the business. Understanding and Managing Risk The business venture is faced with a number of risks throughout its operational lifetime. Risk management is a progressively significant business impetus and investors are becoming apprehensive about risk. Risk management allows the business to reflect on the possible influence of each kind of risk on every process, undertakings, investors, goods, and services (Boehm and Turner 2003). Employing a complete method will enable the business to profit from the ‘upside of risk’. The results of an effective risk management comprise agreement, assurance, and improved decision-making. These results ultimately create gains through enhancing the effectiveness of processes, efficiency of strategies, and the usefulness of the organizational policy. Risk management is an essential aspect of the tactical management of every business. The process entails businesses systematically focusing on the risks inherent to their activities (IRM. 2010). Risk management ought to be an unceasing procedure that allows for the progress and application of the business strategy (Boehm and Turner 2003). The risk management process comprises the following step; Identifying risk Classification of risks Reacting to substantial risks Response preparation Recording and observing risk performance Appraising the risk management structure It is important to note that the SWOT and PESTLE frameworks are important techniques in the risk management process. The Strategy Process Businesses are required to have a strategic approach to their operations. The strategy process refers to the procedure through which business owners create, execute, and assess cross-functional decisions that are meant to enhance the attainment of the business’s long-term objectives (Teece, Pisano and Shuen 1997). This process entails stating the business’s mission, vision, and goals, creating strategies and tactics that are in line with business ventures and programs. Consequently, resources are allocated to execute the strategies and tactics, ventures, and programs (Teece, Pisano and Shuen 1997). This process seeks to integrate different functional facets of the organization in a bid to realize long-term business goals. Market Research and Marketing Plan Market research is a deliberate step taken by business owners to carry out inquiries a certain market. This process entails acquisition of information by business owners in order to make them gain substantial market share (Elkind and Kassel 1995). Marketing research has three fundamental focus points, the business, the consumer, and the competitor. Marketing research enables policy makers in the business to find answers to a number of pertinent questions (Moorman, Zaltman, and Deshpande 1992). For instance, marketing research answers the following questions; What is the level of satisfaction that customers derive from your products and services? What will be the reaction of customers react to changes in prices or product designs? What are the responses received by service agents from consumers? What counter-measures adopted to curb competition will elicit success in a certain market? These questions try to find loops in the business process that might cause inefficiency and reduced productivity. An extensive market research makes the business to stand out in the face of other competitors in the market. A marketing plan is a strategic approach that enables the business to enhance its level of visibility in the industry (Smith and Albaum 2012). The marketing plan serves to show the consumers that the products offered by the business are superior compared to other products offered by competitors. There is no generic form of a marketing plan. This is because different businesses have unique qualities and operate in unique market settings. Therefore, there exists no particular correct method of designing a marketing plan (Smith and Albaum 2012). The marketing plan ought to be a continuous self-evaluation procedure which is exclusive to the business. Before designing a marketing plan the business should be; Cognizant of its strengths and weaknesses highlighted through conducting business environment analysis Conduct an analysis of its goods and services from the perspective of the consumers. What are the consumer preferences? The business should attain marketplace information from the consumers (Shapiro and Varian 1999). Aware of its competitors, present and prospective. Through recognition of the rival’s strengths and weaknesses, the business venture will enhance its status in the market. Make decisions on the appropriate methods of resource application in order to exploit the target market As seen from the foregoing, marketing research should precede the formulation of a marketing plan (Smith and Albaum 2012). Finance and Funding Businesses have different sources from where they can get funding and financing. The monetary requirement of any business varies depending on the nature and scope of the business. Debt and equity constitute the main bases of business funding (Hofstrand 2013). Equity funding refers to the practice where the business owners exchange a percentage of their business ownership for monetary investment. The surrendered stake due to equity funding enables the stockholder to share in the business’s returns. Personal savings form the most basic form of business funding. Personal savings constitute the primary source of equity. Personal resources may constitute pension funds, equity credits, or cash value indemnity plans. Venture capital is regarded as the type of financing that is derived from firms or persons in the trade of investing in undeveloped and private ventures. They advance funds to undeveloped ventures in lieu of a stake in the business. Debt financing refers to the practice of getting capital from creditors with an obligation of refunding the loaned out capital together with interest at a stated imminent period. The creditors gain substantial returns from the interests attached to the loans advanced. Intellectual Property Rights Intellectual property refers to that which has been created by the mind comprising of innovations, literary and creative jobs; and signs, titles and pictures used in trade (WIPO 2001). Intellectual property has two broad classifications, industrial property, and copyright. Industrial property comprises exclusive rights for inventions, trademarks, engineering designs, and geographical signs. Copyright on the other hand comprises of literary jobs like books, movies, music, creative jobs like sketches and pictures and architectural structures (WIPO 2001) Intellectual property rights just like any other property rights enable the creators and/or owners to profit from their personal effort. 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