A Unique Idea for Building a New Venture - Case Study Example

The Process of Creating and Managing a New Venture Name Course Name and Code Instructor’s Name Date Business idea New ventures are said to be firms, which newly built, or those, which have been in existence for less than ten years. To start a new venture one needs a unique idea and the concept that can help to meet the needs of the society in a certain way. One is required to establish the sources of the new idea (Allen, 2011). The new idea can be derived from sources such as the consumers, existing firms, the government, distribution channels, research and development and current trends and demands in the market (Hanusch and Pyka, 2007). The analysis and study of each of these sources in detail can enable an entrepreneur come up with a unique idea for building a new venture. Various techniques can be utilized in generation of new entrepreneurial ideas (Hill and Jones, 2009). Some of the techniques that can be employed include focus groups, brainstorming, checklist method, and problem inventory analysis. Various analyses such as big dream approach needs to be undertaken prior to deciding to set up a new venture. Once a final decision has been made about the unique idea to be pursued, product planning and development process is undertaken (Longenecker, 2008). This enables the entrepreneur to understand the product lifecycle and to define product evaluation criteria. This is then followed by the launch and implementation of the product in the market. If the launching and implementation process is successful, the entrepreneur needs to carry out market test (Allen, 2011). This entails internal tests and analysis prior to product commercialization (Hill and Jones, 2009). This ensures that the product is able to meet the needs or wants of a customer; the new business is able to attract customers to the proposed product and that the business can retain customers who buy from it. Depending on the results of the market tests, the entrepreneur needs to undertake product-marketing activities including product promotion to capture the target audience (Hanusch and Pyka, 2007). This stage marks the beginning of a long process of growth and development in which the firm/product will go through different stages of life cycle. The entrepreneur An entrepreneur is a person who is willing to undertake all risks and efforts involved in creating and starting new venture (Longenecker, 2008). An entrepreneur is an individual who works within a firm in an entrepreneurial capacity and he/she is involved in the creation of innovative new products and processes for the firm (Hanusch and Pyka, 2007). An entrepreneur is usually in possession of a new idea or venture and is accountable for any risks that are inherent and outcomes. They usually take risks and capitalize on opportunity (Hill and Jones, 2009). Entrepreneurs are usually involved in identification of opportunity, assembling the required resources, implementing a practical action plan and harvesting the rewards in a timely and flexible way. Entrepreneurs are active seekers as they are active in grasping opportunities. They take initiatives of making things happen (Allen, 2011). They are also involved in creatively solving problems. In addition, entrepreneurs are known to manage autonomously and take responsibility and ownership (Leach and Melicher, 2011). Furthermore, entrepreneurs see things through and effectively network to help them manage interdependence. They also put things together creatively and use judgment to take calculated risks. Entrepreneurs are self-confidence, highly autonomous and action oriented, hardworking, determined, and creative, ambitious, fearless, persistent, creative, patient and have ethical behaviour. Entrepreneurs are also known to be able to persist, persevere and prevail over various situations (Hanusch and Pyka, 2007). The development of new products and services by entrepreneurs is driven by their creativity that pushes them to innovate and improve on existing process and products. Entrepreneurs are also dedicated to their work and hence work hard for long hours to see to it that their idea is realized. They are also usually determined have inherent desire to attain success (Hanusch and Pyka, 2007). Moreover, these individuals are often flexible and as such, they are able to quickly respond to changing market needs. Furthermore, entrepreneurs have leadership skills, which enable them to create rules and to set goals and see to it that they are followed to the later (Hill and Jones, 2009). In addition, entrepreneurs usually passionate with their ideas and this get them started and keep them there. They are also self-confidence and this often attained via thorough planning hence reducing the level of uncertainty and risk involved. Debate on whether entrepreneurs are made or born has been on going for long (Hanusch and Pyka, 2007). Some authors argue that entrepreneurs can be made through job experience and education. on other hand, some authors argue that only proficiencies such as business plan development and establishing sources of funding can be taught but the basic profile of the entrepreneur is deeply rooted in the individual’s personality structure (Allen, 2011). Thus, it is believed that entrepreneurs are born not made. Scientific research however has indicated that genetic make of an individual is responsible for about 40% of entrepreneurs while the rest is due to environmental conditions. Some government policies are likely to spur development of entrepreneurship (Leach and Melicher, 2011). It is argued that issuance of cheap credit by the government is not likely to spur emergence and development of SMEs (Hanusch and Pyka, 2007). Some of the ways that governments can influence entrepreneurial activity is via direct subsidy, loan guarantee program or a venture capital model. The government can also enhance entrepreneurial activities by integrating entrepreneurship education in schools and at all levels of post secondary education. This can also be enabled by reduction of barrier to entry and adopting proactive measures that facilitate entry of new enterprises (Hill and Jones, 2009). The government can also devise policies that support start up businesses such as mentoring programs and incubators aimed at increasing the number of new SMEs (Longenecker, 2008). Other policies that can aid in development of SMEs include microeconomic policy, tax [policies and direct intervention that favour SME development. SMEs are involved in creation of markets and quickly adapting to meet the dynamic consumer needs. These firms are significantly contributing to economic development and employment provision in many countries (Allen, 2011). They also contribute significantly to innovation and creation of competition. Recent studies have indicated that about one third of new SMEs in USA are owned by women (Leach and Melicher, 2011). Most SMEs are owned and managed by entrepreneurs who establish them. However, as the venture expands, the owner usually relinquishes management role to professionals to help it grow and develop. Entrepreneurs are usually interested in the risk involved in setting up a new enterprise. This enables them know how to mitigate it. An entrepreneur is often interested in the uncertainty business environment risk and risk due to what is at stake. The uncertainty business environment risk entails financial model risk and operational risk (Hanusch and Pyka, 2007). The knowledge of operational risk enables entrepreneurs to be able to execute internally and keep the costs of running the venture under control to ensure success of the enterprise (Longenecker, 2008). Knowledge of financial risk allows the entrepreneur to evaluate financial viability of the enterprise (Leach and Melicher, 2011). Knowledge of risk due to what is at stake enable entrepreneurs to understand the opportunity risk and financial risk that enables him/her to weigh the merits of all opportunities and turn most of fixed costs into variable costs. The opportunity Entrepreneurs have skills, which enable them to cast the net farther and to combine anew; to take problems and turn them into business opportunity; and to adapt to societal and shared problems. As such entrepreneurs are able to recognize special problems, address them and have the desire practically counter them (Allen, 2011). Entrepreneurs require courage and tenacity to launch new ideas and ultimate success depends on this. A problem is turned into a business opportunity by looking out for what one has, but other are in need of it (Hill and Jones, 2009). Problems are the obvious sources of entrepreneurial opportunities. By searching for solutions to these problems, entrepreneurs come up with creative and innovative ideas, which are converted, into practical terms to solve the problems (Hanusch and Pyka, 2007). This results in novel ideas to solve problems and launch new products in the market. An enterprise culture encourages entrepreneurs to turn problems into opportunity via the utilization of constructivism philosophy (Leach and Melicher, 2011). An enterprise culture opens up a field for more groups in the society and results in an influx of new patterns of problem solving, of values, of new ideas being integrated into entrepreneurship and a new quality of participation in the economic area (Hanusch and Pyka, 2007). When these values and problems are in line with entrepreneurial ideas, the image of entrepreneurs in the society is improved. Thus in the case of organizations, entrepreneurs need to create ideas which are in tune with the values and norms of the customers of the firm. Innovation The impact of globalization is being witnessed in both large firms and SMEs. Globalization has presented various opportunities that can be exploited by SMEs through innovation. Innovation can broadly refer to any new development in firms (Hanusch and Pyka, 2007). It may entail creation or re-engineering products or services to meet market demands; introduction of new process for improving product; application of new marketing techniques to increase sales volume; and improvement of operation efficiency via incorporation of new forms of management systems and techniques (Leach and Melicher, 2011). Innovation may help these firms to gain, retain and strengthen their competitive position (Allen, 2011). Thus, new ventures need to invest much in innovation to enter and remain sustainable in the present competitive business arena. Innovative ideas and products can enable new venture business to counter the price oriented competition common in the market. Thus, entrepreneurs who are able to come up with innovative products are likely to establish their enterprises within a short period and ensure their growth and development. However, in most cases these entrepreneurs ability to innovate is limited by resource constraints. Challenges with new ventures Most new ventures face failure situations in their first few years of their operations (Timmons and Spinelli, 2004). These challenges differ from those of established firms. This requires entrepreneurs to have additional set of skills, attitudes and knowledge to overcome them (Allen, 2011). Some of the challenges that may hinder venture creation include lack of family businesses and role models; poor infrastructure; lack of skilled resources, lack of entrepreneurial culture and values; lack of special firms or activities aimed at new organizations; absence of innovative industries and limited or lack of government incentives to start a business (Hanusch and Pyka, 2007). Moreover, creation of a new venture may be deterred by weak capital structures and unavailability of funds from private or financial institutions. One of the managerial challenges facing new ventures is the unwillingness of the founders to relinquish managerial roles to professional managers. Thus, professional managers are needed to successful convert a unique idea into a great business. Sometimes these firms are unable to afford top management due to limited resources at their disposal. To overcome this, the firm can opt for development of its own management team from within. Moreover, inability of management to concentrate on managerial leadership task may result in a firm being unable to succeed. The management that does not involve its employees in decision-making is likely fail in its venture. Furthermore, new ventures are faced with developing effective marketing, advertising and selling strategies that can enable it capture considerable market share. References Allen, K. 2011. Launching New Ventures: An Entrepreneurial Approach, 6th Ed. London: Cengage Learning. Hanusch, H., and Pyka, A. 2007. Elgar companion to neo-Schumpeterian economics. London: Edward Elgar Publishing Hill, C., and Jones, G. 2009. Strategic Management Theory: An Integrated Approach, 9th Ed. London: Cengage Learning. Leach, J., and Melicher, R. 2011. Entrepreneurial Finance, 4th ed. London: Cengage Learning Longenecker, J. 2008. Small Business Management: Launching and Managing New Ventures, 4th Ed. London: Cengage Learning. Timmons, J., and Spinelli, S. 2004. New venture creation: entrepreneurship for the 21st century, 6th Ed. New York: McGraw-Hill/Irwin Read More