Entrepreneurial Strategy and Competitive Dynamics
In the last three decades, the business industry has undergone various transformations and revolutions as a result of globalization. Various players in the industry are formulating various ways of excelling. One trend that is emerging is the entrepreneurial spirit, which is seen as the vehicle for transforming the business sector. Through entrepreneurship, various ideas are formulated and new ventures created. Various players in this industry are embracing it as the ultimate strategy for economic development and advancement. Since many players are embracing entrepreneurship, competition in this industry has heightened. This has necessitated the formulation of strategies in this industry to counter the dynamics of competition. Entrepreneurial strategy and competitive dynamics is therefore an essential topic in the corporate world. This paper examines its importance and application.
Entrepreneurial Strategy and Competitive Dynamics
Entrepreneurship refers to the creation of new values. Creation of values can be achieved in various ways, such as starting up major corporations, coming up with various institutions to cater for various deficiency services, such as education, establishing a family-owned business, and engaging in a non-profit venture. Entrepreneurship is realized through taking the advantage of any opportunity that comes in one’s way. Opportunities can arise from various ways, including past and current work experience, suggestions made by friends and family members, hobbies that develop into business, and various happenings that create a realization and awareness of unmet needs (Gundry & Kickul, 2006).
Entrepreneurship strategy is realized through opportunity recognition. Opportunity recognition involves discovering and evaluating transformations in the business environment, such as consumers’ demand shift, a change in technology, and social cultural trends that can be exploited. A viable opportunity must be achievable, durable, value creating, and attractive (Murra, 2006).
An environment with entrepreneurial spirit creates a competitive dynamics. Competitive dynamics is an intense rivalry that involves activities and responses among competitors within the same line of business vying for matching customers within a market place. Competitive dynamics is realized if a company launches a competitive action. On the other hand, a competitive action is launched to capitalize on the market, to improve the position of the company on the market, and to obtain the advantage of a first mover. This means that Entrepreneurial strategy and competitive dynamics go hand in hand and an understanding of this topic is essential for an organization (Warren, 2002).
Example of Entrepreneurial Strategy
There are various entrepreneurial Strategies. This section will consider two examples.
Fastest with the Mostest
Fastest with the Mostest strategy focuses on leadership in the new industry or market. The strategy aims at creating a big business, but not right away. The focus is normally on establishing a good leadership as the foundation of the business. This strategy is rewarding if successfully applied. For instance, Hoffmann-LaRoche, a Swiss entrepreneur, used this strategy and patented a vitamin product that later became the largest and most profitable pharmaceutical company in the world (Warren, 2002).
Hit Them the Where They Ain’t
This strategy is realized from the combination of two strategies, different from each other. The hit them involve creative imitation whereas where they ain’t involves entrepreneurial judo. In this case, an entrepreneur comes up with something that has already been done, but in a creative way, such that it becomes better than the original creation. An example of this strategy is the one used by IBM, which comes up with products that are unique, but with some origin from other companies (Warren, 2002).
Importance of This Topic
Entrepreneurial strategy and competitive dynamics is a topic that every student pursuing any business related course ought to study. This is because the topic talks about the position of small scale business organization and how best one can improve them to ensure they become a considerable economic force. This means that one is able to understand the role played by small scale business organizations in an economy of the nation. The topic makes out the roles of various opportunities, entrepreneurs, and resources present when pursuing a given venture. As a result, it is an eye opener for potential entrepreneurs as it awakens them to possible opportunities. The topics inform the student on various strategies one can use to enter into a given venture. Through this topic, one is exposed to competitive dynamics and the components used for analysis.
The Usefulness of Understanding This Topic in Today’s Corporate Structure
In the contemporary corporate structure, it is essential to understand the usefulness of entrepreneurial strategy and competitive dynamics because the topic shapes the economy. In the first place, the economy of the country is shaped by entrepreneurial activities, and this is realized from studying entrepreneurial strategy and competitive dynamics. As a result, this topic shades light on the role played by business ventures and small scale organizations in a big economy, such as the economy of the USA. By understanding the essence of entrepreneurship undertakings in a large economy, the players in this industry are better placed to encourage and promote small scale ventures in the corporate world. At the same time, measures can be put in place to control and promote the operation of entrepreneurial ventures in an economy (Gundry & Kickul, 2006).
A corporate world is full of resources that can be tapped to successfully advance the economy. However, most of these resources have not been discovered and thus potential business opportunities are still untapped. By studying this topic, the corporate world can be flocked with innovations and creativity since this topic explores the role of various opportunities, entrepreneurs, and resources present when pursuing a given business venture. The corporate world is in need of new ventures, but the point or method of entry is normally a challenge to many. However, by understanding this topic, one is introduced to three entry strategies including adaptive, pioneering, and imitative. These strategies can be employed when launching new ventures.
A corporate world is propelled by competitive activities. However, any competitive activity done by an individual has a reaction from the competitors and thus understanding this topic is an essential aspect in managing competition in the corporate world. This is because the topic explores how competitive activities, such as entry of a new competitor on the market may trigger a cycle of reactions and actions among closely linked competitors. Also, understanding this topic leads to the understanding of competitive dynamic analysis and its components, including threats analysis, new competitor action, types of competitive action, and capability to respond among many.
How to Implement, Train, Focus, On or Mentor Someone on This Topic
To implement, train, focus, on or mentor someone on this topic, various topics under it should be considered. First one should be taught that entrepreneurship is about creating value and thus various ways of value creation should be taught. Thereafter, one should explore various ways through opportunity recognition and how it is realized because entrepreneurship involves recognizing an opportunity. Opportunity recognition involves discovering and evaluating transformations in the business environment. An exploration of opportunities should further involve consideration of assets needed for entrepreneurship. About the assets, considerations should be given on explorations of social capital because it has been proven as essential in entrepreneurial ventures. Thereafter, considerations should be given to the leadership and this should involve an exploration of leadership needed to successfully run an entrepreneurial venture. Thereafter, exploration of an entrepreneurial strategy, including how a new entry is made, the best leadership for a given strategy, and the combination of various factors in a given strategy is made.
The exploration of this topic should further involve an exploration of competitive dynamics by considering threat analysis, market commonality, resource similarity, and market dependency. In addition, an exploration of tactical actions and examples and analysis of competitors’ resources should be made. Lastly, forbearance and co-opetition should be explored (Gundry & Kickul, 2006).
How to Incorporate This Topic into Human Resource Occupational Structure
Entrepreneurial strategy and competitive dynamics can be incorporated into human resource management. Human resource management essentially entails ensuring the efficient operation or functioning of the human capital in an organization. The occupational structure of the human resource management profession involves preparing the human capital for a specific task. Since entrepreneurial strategy and competitive dynamics involve people taking up the opportunity in the commercial world, human resource is an essential aspect of this topic because it prepares people for entrepreneurial activity (Murra, 2006).
Among the aspects of entrepreneurial strategy and competitive dynamics is the consideration of the assets of an entrepreneurial firm. In this case, human capital is considered as the most important asset of an entrepreneurial firm. This means human resource management is needed in entrepreneurial strategy and competitive dynamics because it provides the base for the acquisition of human capital. It has been established that social capital is essential for entrepreneurial firm. As a result, human resource management is essential in providing guidelines for social capital (Gundry & Kickul, 2006).
Gundry, L., & Kickul, J. (2006). Entrepreneurship Strategy: Changing Patterns in New Venture Creation, Growth, and Reinvention . London: SAGE Publications, Inc .
Murra, J. (2006). A concept of entrepreneurial strategy. Strategic Management Journal , 5 (2), 1-13.
Warren, K. (2002). Competitive Strategy Dynamics. New York: Wiley.
ENTREPRENEURIAL STRATEGY AND COMPETITIVE DYNAMICS 8
Running head: ENTREPRENEURIAL STRATEGY AND COMPETITIVE DYNAMICS
CORPORATE VENTURE FOR DISNEY
Corporate Venture for Disney
The Disney Company is one of the leading company in the entertainment industry in the United States and the world over. Disney started in 1923 as Disney Brothers Cartoon Studio by Walt Elias Disney and his brother Roy Disney. Like any other company, Disney has gone through some hardships, faced some obstacles and encountered some problems in its operations. This paper is a discussion of the problems, obstacles and hardships that Disney has faced. The paper also attempts to explain whether the Disney family business is a success or a failure with regard to corporate venture theories and practices. This paper is going to use Disney as the international corporation whose rise and success from its time of inception
Disney Corporate Venture
How Disney Corporation has redesigned components of their business, or re-engineered their business in total to support new corporate ventures
As has been mentioned, Disney started in 1923 and has since grown from a small studio in California, USA into a worldwide corporate venture. Disney has since expanded to other venture such as theme parks usually known as Disneyland. The company has faced different challenges that threatened to hinder its existence and reduce its competitive advantage as will be listed below. However, after some time, the management of the company came up with new strategies to get the company back into action, just like E. E Muir and Sons did. The first approach taken in the company was that of leadership approach. Leaders form an important part in the company. They are entrusted with top decision-making, formulating and implementing vision, missions, goals and objectives of the company. Thus, unlike Muir and Sons, Disney Company decided to move away from family method of leadership (Baum & Locke, 2004, p. 13).
The company also adopted the theory of entrepreneurship. Entrepreneurship is the process of creating, organizing, managing and taking the risks of a business venture (Lecture 1). Through the theory of entrepreneurship, the company was able to come up with processes such innovation, enterprises, creation of wealth, growth, change, employment and adds value. Innovation which allowed them to come up with new business ideas, for example apart from producing cartoons for both children and adults, they also started producing motion pictures. Thus, they came up with a new venture to expand the business. Through the adoption of entrepreneurship theory, Disney changed some of their peoples’ view on cartoons and motion picture by constantly coming up with new interesting films for their customer. They also expanded within the United States and around the world thereby creating employment for its customers (Luo & Yan, 2001, p. 75).
Disney decided to form alliances with other companies in different parts of the world to increase their presence globally. The formation of alliances allows the company to work together with companies from other parts of the world. This allows the company to know different cultures, requirement for starting business in different countries as well as customer preferences. The company also came up with different systems and structures in place to help solve governance and management issues. It is already said that Disney has not adopted the rule of family members in the company (The Walt Disney, 2013), instead, they have chose management and board of directors from other families. The management and board of directors are made up of people with knowledge in entrepreneurial and innovation skills
Just like Muir and Sons Company, Disney has great respect and value for its customers and clientele, this quality normally compels the company to come up with highly valued products and services for their esteemed customers. The company also formed various mergers and acquisitions with other companies so that they could increase sales and remain competitive in the entertainment industry. Disney became very innovative and as such came up with new shows and other ventures such as cable TV, theme parks, radio networks, cruise ships, book publishing, Broadway theatres and a city in Florida (Marcic & Daft, 2005, p. 231)
The Challenges and Obstacles
Disney corporate venture encountered obstacles such as production expenses in the company. Immediately after the production and release of their film snow white and the seven dwarfs, the company made a lot of sales and even went ahead and planned to produce more animations, unfortunately the returns from the first film was not enough to fund the production of subsequent animations. This was also coupled by the fact that the company also supported world war two (the Walt Disney Company, 2013). The obstacle that the company faced was cultural issues. This happened at a time when Disney was globalizing its operation and expanding its venture globally. A good example is Euro Disneyland issue in Paris, France when the company opened up a Disneyland in France basing their ideas on American culture while completely ignoring French culture.
The company also faced difficulty of systems and structures. Systems refer to how power or authority is shared in the company. The system can be oppressive or liberal (democratic) type, for example, the two brothers had issues in the management and sharing of responsibilities at the beginning. Systems are there to bring in control to the corporate venture. Research shows that entrepreneurship suffers and it faces more problems when it is trying to incorporate more hierarchical levels into its structure (lecture 6). Hierarchical levels enable the company to relocate resources, open new ventures and acquire the ability to identify market opportunities.
How Disney Overcame These Obstacles and Issues
Problems, issues and obstacles usually threaten or get in the way of competitive advantage of a company and sometimes can make the company extinct. However, Disney management knew better than to let the company shut down. Therefore, the company came up with proper leadership structures that in turn came up with new missions, visions and goals. They also made sure that the company’s objectives were in place. Disney has also made use of advanced technology both locally and globally to make sure that they produce quality film, animations, TV shows and other services for a large number of customers. To ensure its competitive advantage, the company has given so much attention to the requirement of their clientele and made sure that they avail only the best of programmes and other services (Kuratko, 2008, p 65).
Walt Disney Corporation also bounced back into action by taking entrepreneurship as an important factor for developing the business venture. They became innovative by offering variety of services to their clientele, they expanded globally and created jobs for their clientele and people within the environment in which they operate. They became more culturally conscious, which has enabled them to successfully expand the business venture globally. Leadership is very important in the prosperity of an organization and Disney decided to come up with the most effective and efficient leaders (Lecture 3).
These developments have occurred in the company since its inception. For example, at the beginning, the company was under the leadership and management of the two Disney brothers. As time went by the founder (Walt) passed away and Roy was left to manage the company. He decided to choose well-trained people with leadership skills to lead the company. These leaders have made sure that the company has adopted the use of high quality technology and employed the best human resources. The company has also gone through many innovative activities, formed mergers, acquisitions and alliances that have surely made it successful to date (lecture 6).
The changes in leadership have lead to great success in the company. As it can be seen Disney has tremendously increased its services as mentioned above, the company has globalised its operation and is currently using advanced technology. The internal workforce also changed, with people being employed in their areas of expertise. Just like Max Muir, the leaders at Disney value clientele and customer satisfaction. They respect and serve their customers well and make shows that are appealing to the clients. Unlike Max Muir, Disney has not been in the constant leadership of the two brothers and their generations, Disney does not offer advanced loans to its clientele. This difference is as a result that the E. E. Muir & Sons and Disney Brothers Studios do not operate in the same industry. Disney also checks the product life cycle of their products and services and improve them to maintain its competitive advantage (Lecture 5).
Kuratko, D 2008. Entrepreneurship: Theory, Process, Practice, Belmont, California, Cengage Learning, pp. 65
Lecture 1, Introduction to corporate venturing
Lecture 3, Levels of corporate entrepreneurship in organizations
Lecture 5, Exploiting new corporate ventures
Lecture 6 a, Constrains on entrepreneurial performance
Lecture 6, Structuring the company for intrapreneurship
Lock, J & Baum, R 2004. The relationship of entrepreneurial traits, skills and to subsequent venture growth, journal of applied psychology pp. 13
Luo, Y & Yan, A 200. International Joint Ventures: Theory and Practice, M. E Sharpe, pp. 75
Marcic, D & Daft, R 2005, Understanding management, Belmont, California, Cengage Learning, pp. 231
The Walt Disney Company 2013. Retrieved from http://thewaltdisneycompany.com/about-disney/leadership
Corporate venture for Disney 7
Describes all of the components of the social entrepreneurship framework and the use of bricolage for one of the social enterprise’s programs
The model of social business takes into account of the developments in enterprise and social expertise. Social entrepreneurship is another word that easily substitutes the term social business model. The concept of social entrepreneurship involves conventional business model which is divided into other chapters of interest. Formulation of business ideologies considers in entrepreneurial terms considers social profit orientation of business and its profit objectives (O’Neill, 1998, p.294). Composition of social entrepreneurship takes into consideration the ethical objective of the organization. For instance, businesses are bound to make and maximize profit. Objectives of business towards profit maximization form the basis of making classification of social entrepreneurship. Social entrepreneurship may be defined as a process that involves use of innovation with a combination of resources with the aim of pursuing business opportunities. These opportunities serve significant roles in addressing social needs of a business. Social business is regarded as the subset to social entrepreneurship. This implies that social businessmen are social entrepreneurs, while social entrepreneurs do not conform to this trend.
The first component of social entrepreneurship refers to social business. Validity of these terms relates to their respective modular applications. Social business opportunities are derived from social entrepreneurship, and their corresponding interactions shape business operations in any set up. For instance, social business deals entirely in wealth citation and management, and the process must articulate ethics. Social business as a component of social entrepreneurship involves wealth and economic creation, something that lies within the discretion of this term. Social business lies at the middle of profit maximization and operations of non-profit organizations. Validity of social business depends upon the factors of conventions within any organizations, for instance, dividends payable to shareholders is an element of profit maximization agenda. Wealth creation is a responsibility of social businesses, and it takes place on the account of creativity. Operational framework of social businesses considers that wealth creation and generation requires skillfulness or suitable platform to undertake the entire process. As a component of social entrepreneurship, social business ensures that social objectives are attained to the public, which include direct shareholders and the public in entirety. Optimization is a concept required by the social business operators, who acknowledge the existence of opportunities and the need to operate within conditional confines (Murphy & Coombes, 2009, p.342). Other than this, social businesses articulate self-reliance and independence into the investment process. In addition, fundamentals of social businesses uphold the need for creativity to solve most social problems facing the community. This concept is in concurrence with the pillars of social entrepreneurship, which equally exalt innovative ideas in promoting social processes in businesses. Social entrepreneurship framework incorporates the applications of social businesses in an innovative manner to solve social problems in the society. Pillars of social businesses offer contemporary guidance to business investors in undertaking crucial innovations measures. Literature of business reveals three major components including service to relevant customers, revenue model to the government and how the company is organized to deliver its services to clients. The business model is majorly charged with the responsibility of providing services to the society who form major stakeholders. In addition, these models only work to supplement the operations of social entrepreneurship. Social business has the mandate of ensuring model innovation within the public domain, which forms the backbone of its operations.
In evaluating social business model, it is necessary to examine other components that constitute to the validity of the entire social structure. According to the article, aspects such as value proposition and value constellation form the basis of reasoning for the application of social businesses approach alongside social entrepreneurship. The two components of social business help in establishing coordinative platform under which financial translations are conducted to generate a positive profit equation. According to Grameen’s analogy, the application of business model offers the platform for consistency and integration of company pictures so as to help in realizing revenues through value proposition and value constellation respectively (Gedajlovic et al., 2013, p.463). Grameen generated new approach to social businesses that operated beyond conventional for-profit business models, in deed he generated new set values in line with value constellation and propositions that would match into a positive profit equation necessary for the growth of social enterprises. This concept was in accordance to the stipulations of business entrepreneurship that outlines establishment of suitable positive profit equation, used as a basis for determining social and economic levels into the society.
Convectional business model being an aspect of social entrepreneurship outlines various simulations in undertaking crucial and procedural operations. These stipulations share much similarity with the social business aspects. The first similarity relates to research aiming at challenging the eccentricities of conventional wisdom. According to researchers, there exists radicalism to business model innovation which is established as the strategy to create and modify rules within the competitive industry. The second point of convergence between social and conventional business relates to the stipulations of the Grameen bank, which defines entrepreneurial model in three fundamental perspectives, namely the value proposition, value constellation and profit equation. The ongoing decision gives account of how conventional and social values operate within social business to bring changes to the overall entrepreneurial business (Gedajlovic et al., 2013, p.466).This implies that entrepreneurial business relies on social business as its major component, which social entrepreneurial framework operates.
The bricolage entrepreneurshipstudies take various dimensions, depending on the validity of the process. Application of bricolage concept requires refinement of economic theories to evade any eventual underpinnings associated with enterprise developments and progressive operations. Conceptual framework of bricolage relates to the powers behind exclusive acquisition of resources. Theoretical ramifications behind social and economic intrigues outline more constraints to the overall entrepreneurial process (Ilahiane, 2011, p.34). Definitive approach to bricolage concept refers to ability to do with whatever is available at hand. Applications of bricolage concept have had mythical and theoretical interpretations. According to its functional aspects, knowledge of bricolage helps in proper acquisition of resources that would be necessary in executing life challenging processes. In addition, application of bricolage concept helps in developing entrepreneurial skills necessary for obtaining resources at hand, whenever required. Ability and ostentation behind bricolage concept assist entrepreneurs with the best preparations in meeting an eventuality of economic performance. Operation of bricolage takes three accounts of social elements. The first concept that involves development of new and suitable ideologies refers to cultural anthropology. Development of ideologies involves incorporation of social and world views. The second aspect of bricolage involves adoption of ideal education that is drawn upon the existing skills and competencies in dealing with challenging learner (Murphy & Coombes, 2009, p.329). Bricolage is never confined to a particular area of social business, but operates in divergent dimensions of life. Divergence approach is sometimes referred to as hybridization method, as it involves the classical and nouvelle concepts. Bricolage serves most responsibilities in establishing resourcefulness and adaptability to the existing situations. This concept captures well entrepreneurial framework of doing and creating availability to social and economic resources.
Clearly Define the Social Value Proposition of the Program
Value proposition is defined in terms of anticipated customer’s perception about a product. Value proposition asks question of who the customers are, and what the organization offers to respective customers that they value. Two propositions must supplements an ideal system of consideration to any act or innovation. Organizations cum companies are associated with production of various goods, which are normally consumed by customers. At this point application of value proposition is important in determining range of customer reach as well as their taste. According to the fundamental principles of value propositions, ascertainment of nature of market is ideal in the entire innovation and entrepreneurial process. This attains to the fact that value proposition, if well evaluated gives the most appropriate answer to most questions that are ideal before the commencements of innovation process. Importance of value proposition gives more challenge to an entrepreneur in coming up with the best brand of product or resource that captures well the unsatisfied demands of customers. The most important aspect in social entrepreneurship is market definition and capture. In addition, the underlying statement in value proposition help in the identification of what benefit a customer is likely to get if he consumes the product from a particular vendor. Essentially, value proposition forms the elevation pitch through which pricing and quality determination is ascertained, regarding a product. In addition, this aspect highly determines the likelihood of competition from other social sectors. The main goal for value proposition is to provide convincing grounds to the customer that by associating with the company’s product, he or she will incur less cost compared to consuming other products. Establishment of a viable value proposition requires the company to determine aspects that benefits the customer, and how they are likely to enjoy more out of the product consumption. Value proposition defines the contexts of product’s validity and usefulness to consumers (Hindle, 2010, p.624). The basis of undertaking value proposition is determined by need for the company to undertake progressive entrepreneurial processes, despite competition it may face from its surrounding. Value proposition is preceded by terms such like, value constellation, and a positive profit equation.
Compares and contrasts different approaches for scaling a program’s social impact and makes recommendations for how the social enterprise could best scale the program’s social impact
There are ranges of methods used in scaling up a program’s social impacts. Scaling up is enhanced to ensure that intrigues of social impacts are contained within certain degree of operation. Realization by most entrepreneurs to the exclusive options of scaling processes enables them acquire avenues to move down to less promising paths. The conceptual framework to scaling down is based on the following platforms. The first method of scaling down social impacts includes envisioning through matrix method. The matrix strategic method of scaling out gives range of options based on two key decisions that face social entrepreneurs. According to this approach, entrepreneurs are prompted to determine what to scale and how to scale it. By considering these two strategies, entrepreneurs are sufficed by measures of adopting new possibilities to the existing social matrix. In addition, this extent gives the platform to social entrepreneurs in developing an effective strategy in scaling out social impacts (Seawright et al., 2013, p.204). The conceptual approach to matrix method of scaling out social impacts involves citation of various categories of answering questions. This aspect is sometimes called mechanism of extending the reach, and ranges from lose, moderate to tight mechanisms respectively.
The first concept captured under the matrix method involves framing social innovation. Framing the social innovation requires definition of what kind of questions. According to this principle, social entrepreneurs are given more insight to answering contentious issues regarding social impacts that they face. Understanding the what equation under the social matrix approach, gives more incentives to entrepreneurs in forming the best combination of forms, with the view of spreading their innovation, while minimizing risks associated in the process. These innovative means may take form of programs, which are basically procedures used in serving interest of specific social goals. For instance, an example of D.A.R.E program sensitizes the local police to the public, especially the school children on the dangers of drugs (Kim & Mauborgne, 2009, p.78). This aspect of mitigating social impacts has effectively helped in solving most social impacts; they would otherwise derail progress of an organization.Social entrepreneurs are under the obligation to think critically and ensure that the best approach is implemented.
The second method of scaling used by entrepreneurs includes mechanisms for extending the reach. This concept is commonly known as the how matrix, and adopts movement from left to right in a scale spectrum. This movement increases the intensity and range of solution available in scaling down the effects of social impacts. The driving factor of the scaling process is based on the rising trend in the scale, and consequently increases resource requirements for the organization. On the left of this scale, entrepreneurs disseminate information, and share whatever information available with the rest of social fraternity. The organization assists those interested in their information in making real innovative processes. Who matrix works alongside the term referred as affiliations, which are agreements between two or more parties existing within identifiable network. Afflation takes prescriptive or restrictive platforms on proceed in a multiple dimensions such as establishment of common brands, funding responsibilities, reporting requirements among other aspects. The end effect behind the adoption of affiliation concept is to culminate any eventuality associated with social malpractices in service provision by major organizations. The scaling mechanism based on who terminology extends to an elaborate end of branching concept. This terminology refers to a scenario where the branched organization is legally within the entire organization. Branching is one technique applied by most organization in extending the entire innovation process of social entrepreneurship (Smith & Stevens, 2010, p.79). The end result of these collective processes is the eventual scaling of social impact associated with the implementation of development agenda. Based on the underlying importance of scaling social impacts, social entrepreneurs have the responsibility of spreading their innovation levels through multiple approaches explained above. Organizations must create a stronger base to in order to spread risks associated with their innovative plans. With the incorporation of these resolutions cum scaling approaches, social impacts are likely to reduce even as organization begins to realize theirentrepreneurial agenda.
Theory for Change of Product
Inclusion of theory of change within the organization framework has led to evolution of new phase of criticism between funders and grantees of companies. The traction to these changes continues despite high expectations associated with the change of theories to various organizations. Change of theory requires robust and sequential operations of missions in line with the stated theoretical change platform. Opposition to these changes still generate mixed reactions from various social quarters, for instance, philanthropic thinkers attribute no fault to theoretical changes, citing no effect on the balance of power between funders and the organizations they support. An example of opposition to theory is manifest in the concern postulated by the former Ford Foundation president Berresford, who expressed concern regarding validity of funder-led strategic planning that was associated with the imposition of wearying and unnecessary demands on applicants and granters. In addition, some philanthropic bloggers argue that theories of change make sense in a static landscape. In equal dimension, fundraiser fails to adopt this theory of change since they regard it being intrusive to the demands that are made. Funders have a mandate of making relevant social justifications regarding the applications of theory of change. For instance, they have to accept complexity behind this theory and exercise maximum patience while considering micromanaging techniques, especially on grantees. Theory of change considers developmental platform that funders must consider before making an eventual decisions to adopt the change. The first issue is to consider the impacts generated by the theory in its application rather than the theory itself (Dacin et al., 2010, p.367). Care about the impacts of this theory is essential in establishing future trends regarding its applications. In addition, theory of change must equally anchor on a suitable discipline that funders and grantees have a mutual operation. The social institutions provided by funders and grantees give the best opportunity for ascertaining theoretical change. Social commentators, especially funders have had their voices echoed by certain concepts that accompany theory of change. The first group of analogy relates to radical skeptics and agonistics. In summary, theory of change must always sequential processes, especially at the development stage, and these processes are communicated to theoretical philanthropist for their due consideration.
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SOCIAL ENTREPRENEURSHIP 2
Running head: SOCIAL ENTREPRENEURSHIP 1 1
Entrepreneurship in India
Entrepreneurship is the ability of an individual or group to identify a business opportunity and find the necessary resources to start the business. However, every entrepreneur faces challenges before starting up a business. Entrepreneurship is quite difficult in developing countries as compared to developed countries. India is considered as a developing country that would one day have more entrepreneurs than any other country. It is known to have the best software engineers and programmers around the world. That helps to make opportunities for those who want to follow their passion and open up their own businesses, but there are also many challenges that need to be addressed like family, social, technological, financial and economic challenges. In fact, India has a tendency to overthrow these challenges by creating opportunities for economic empowerment programs, and it has already begun to build its own Silicon Valley which is expected to be greater than the one in the United States.
After the second five-year plan period, the country played an entrepreneurial role that helped to generate and support the new entrepreneurs who are considered important in achieving economic growth in India. This paper will discuss the challenges that the entrepreneurs face in India, and what solutions are there for entrepreneurs fixing the problems. It will also answer the main questions: How will that play a prominent role in India’s growth?
2.0 Literature review
2.1 History of entrepreneurship in India
Before 1991, entrepreneurship in India was a little success. This owed to the fact that people lacked ambition and licenses were hard to secure. Decisions to grant licenses were made on a connection basis as opposed to a competition basis. However, the Swadeshi movement promoted to attain a free economy that was not based on connections but competitive culture (Roshni et al., 2011).
Following that movement, the economy in India was liberalized. Prior to the liberalization of the economy, Indians majored in taking up family businesses which made other nations to defeat Indians market for it lacked innovation. Under the close-knit joint family structure generations lived together under one roof. Wealth from the family business supported the joint family providing a social safety net for the family members. In that structure, business and family were intertwined though different rules existed for different entities. Thus survival of the business becomes synonymous with survival of the business (Roshni et al, 2011). Indians were put in a situation where they had to change the way in which they looked at businesses. Only a few Indians were able to implement the new economic policies. Other Indians found this extremely difficult to adapt into the new policies. They were not flexible and some lack the financial back up to implement these changes.
IT has recently however paved way for more business owners to be innovative business wise. This new technology has brought wealth to the Indian businessmen. Liberalization of trade in India made it possible for Indian to compete internationally. It changed the nature of business for in India. After liberalization the business in India was better. Large numbers of businesses started to grow such as realtors, developers and distributing personnel. More success followed with the proper allocation of capital. Entrepreneurs were able to know the angle in which the customers thought. Later joint ventures were established in the country to grow capital. To maintain business, the Indian entrepreneurs the Indian entrepreneurs separated business which separated the control which operates the business for the benefit of the owner and family succession. To make proper development, Indian business owners should make professional managers. Professionals will deliver as opposed to a family member with no business training. The management controls should be with a professional and should be effective and efficient to benefit both the employee and the business owner. As Indian businesses became very professional, the opportunities for globalization were increased.
2.1 Risks to Indian entrepreneurship
The entrepreneurs of India will continue to grow if the economy maintains its growth. The following are some of the challenges faced by entrepreneurs in India:
Terrorism in India can be attributed to Naxalite radical movement and religious communities (Roshni et al., 2011). Terrorism interrupts and delays investment in any country. It is also responsible for creating uncertainty that prevents terrorists from investing. Nobody is willing to invest in a country that is politically unstable and vulnerable to terrorist attacks. Investors want to be sure that their business will be sustainable and security is vital for sustainability. It is therefore necessary to comprehend a country’s culture and their response to terrorist attacks. A country’s culture is there in television, history and religion. Indian culture is intolerable and in it are many differences. The difference with India and Europe is that India where as Europe is a continent with independent countries, India is a country that has united many divergent countries.
Despite the risk of terrorist attacks, Indian culture is resilient to terrorist attacks. They were able to respond sensibly during the November 26th 2008 attacks in Mumbai (Roshni et al 2011) . India was restrained and balanced in dealing with that one terrorist attack. Indian entrepreneurs abroad are also able to work under the risk of terrorist attacks. There are Indian businessmen in terror zones like Afghanistan. They work closely with USAID, Asian Development Bank and the World Bank.
2.1.2 Political risk
India is a country with many political parties. It is characterized by different castes, languages and religions. There are a lot of complexities in the political state of the country. These political parties are involved in addressing the needs of the people at the lower level (minorities) and give them a platform to voice their needs at a national level. The lack of a coalition is a challenge to development as different groups are represented by different people. The lack of a coalition of political parties presents the risk of conflict of interest. Various groups want different things for their people, the only problem is that these different groups share the same national resources. These resources range from natural resources to man made resources.
The foreseeable future will be characterized by the coalition of the major political parties of the country. India is in dire need of managing its political differences and processes for there to be an atmosphere to attract both internal and external investors. Investors are attracted by the political stability of a country. The coalition government might slow the reform process but it is vital for the long-term development of the country. As the economic reforms continue to be implemented the focus will shift from caste and religion to economic growth. Economic progress will in turn change India’s political landscape for the better and improve India’s political stability. The risk of political instability can be changed into an opportunity for India. It presents both sustainable economic growth and political stability. The future of India will be characterized by a combination of both business and politics. This combination will create a conducive environment for conducting business and attract entrepreneurs.
2.1.3 Economic reforms
After the 1991 economic liberalization, no other economic reforms have taken place in India. Economic reforms are needed for economic growth to continue in India (Roshni et al 2011). Economic reforms will also be made slow by the coalition governments. It will be easier for the government to repair than create new infrastructure through public private partnerships. Lack of economic reforms impact investors in that the old system is not flexible. Lack of flexibility prevents investors from venturing into India. The economy is changing rapidly to day and those countries that remain rigid face a huge blow in economic development. Globalization requires for a country to have its economic reforms redone every now and then. Lack of economic reforms has slowed down the development in infrastructure. There is a dire need to invest in power, roads, ports and bridges. An important area of reform is the power sector as many industries depend on power. No industry can make a transformation without power. The Indian government thus needs to push the reforms on power generation, transmission and distribution. Lack of proper infrastructure can dampen the Indian entrepreneurial spirit. To compete globally the Indian government needs to push on the reforms.
Corruption is one of the major reasons behind slow economic reforms. Corruption in the government offices causes for reforms not to be prioritized. Those in office have been known to take advantage of their power to allow favors to those who can afford to bribe them, their peers or themselves (Roshni et al., 2011). This misuse of power cripples reforms in the country thus creating a bad environment for investment. Corruption is one of the reasons reforms in the infrastructure and power departments has been especially slow. This demonstrates that institutions and leadership ought to be transparent to reduce corruption. The investors should be allowed to access public spending on reforms. Embezzlement of money meant for reforms is also another factor that slows down investment. When money that should have been able to fund reforms is channeled in other sectors that are not related to reforms, this has a negative effect on reforms. For example, the overspending on the commonwealth games led to heavy losses being incurred by the exchequer. This was as a result of corrupt politicians and bureaucrats. Reforms cannot take place with corruption in India. It is therefore necessary for the Indian government to address the issue of corruption and continue with the next phase of reforms.
2.2 Challenges of entrepreneurship in India
2.2.1 Rural entrepreneurship in India
The changing global environment is a major threat to small scale businesses in rural areas. The rapid population growth combined with increased urbanization creates increasing demands. It is projected that by 2020, the urban population of India will have doubled (Nandanwar, 2011). Since globalization is a macro-concept and rural entrepreneurship a micro concept, it is very difficult to establish causal linkages between the two. In the ideal situation, globalization is said to have a positive effect on the economy. Globalization enhances a country’s ability to exploit advantages arising from increased business. On a national level, globalization is favored. However from a rural perspective, globalization is puts rural entrepreneurs at a disadvantage.
Rural entrepreneurs lack in facilities that are required to foster entrepreneurship at a global level. Rural areas lack affordable facilities. Most rural entrepreneurs are out at a disadvantage by lack of access to market information and technologies (Nandanwar, 2011). Rural entrepreneurs lack access to credit facilities. Credit facilities are vital to compete in the modern world. Access to loans increase investments and provide funds for businesses to transform. Many entrepreneurs in the rural areas face transportation costs that further reduce their ability to compete. Rural entrepreneurs find it extremely hard to transport their product to the urban areas. Transport cost is relatively high thus trading in the urban areas is expensive. This puts them at a disadvantage of responding to emerging opportunities in the urban areas.
Cultures of people in the rural areas puts them at the disadvantage of competing at global level. There are Indians in rural areas that put more emphasis on traditional ways of life than on material success in a competitive world. The rural people, by preserving their traditions miss out on competing at a global level. The economic and institutional structures of policy do not favor international competition. Globalization thus presents real dangers to the rural entrepreneur when set against the advantage of the wider economy (Saxena, 2012).
2.2.2 Distribution effect
One other challenge of entrepreneurship is the inequality of women. Many rural women are hampered form being entrepreneurs by traditional factors. Women unlike men India have less access to things like education, training and other productive activities. They lack access to resources such as land, capital and credit. The sexual division of labor in India excludes women from gaining any income that is from cash crops. Women have less incentive to respond to economic signals since they have less control over any income. Women have long been left to work on household duties and nurturing of children while the men are out in the streets making money.
This sexual division of labor limits entrepreneurship of women. For the few women that are able to able to join the men in the entrepreneurship world, they are faced with the problem of balancing life. These women lack family support to be entrepreneurs. They are expected to balance household chores and business life. Some internal factors that prevent women from investing include the lack of confidence and the lack of a strategic vision.
Indian women are very attached to their families. They are expected to attend to domestic duties and look after children and other members of the family. Much time and energy is used in household chores. Women thus find it extremely difficult to run enterprises with concentration.
There is marginalization of Indian woman. Though the Indian constitution speaks of gender equality, male chauvinism is still practiced in India. Women are discriminated against. The entry to business requires the approval of their husbands or other male figures in the family. Entrepreneurship is seen as a role of men. This puts the females at a disadvantage as they lack the support to become entrepreneurs.
Indian women lag behind in education. Those who are literate are provided with less or inadequate education as compared to their male counterparts. This is mostly because as girls, these women are married off. Majority are just purely illiterate. Due to their little education levels and illiteracy, women entrepreneurs in India remain in the dark about the development of new technology, government support and new methods of marketing and production which encourage them to flourish.
Social barriers such as culture hinder women from breaking into the entrepreneurial world. Castes and religions hinder women from growing and prospering in the business world. This mostly the case in rural areas; where women are perceived suspiciously.
Women entrepreneurs encounter the problem of securing quality raw materials. In the case where raw materials are inadequate, they have to pay more. This prevents them from being business women since they lack the financial back up to purchase raw materials. Women mobility is limited in India. This is highly because of traditional values and the inability to drive vehicles. Moving alone in the night or asking for a room in the night is considered highly suspicious. Men are also known to show a special interest in women in the work place and this makes it impossible for the women to deal with the business. Lack of entrepreneurial aptitude is a matter of concern for Indian women. Even after attending various training programs, the Indian women lack an entrepreneurial bent of mind.
Management has become a specialized job which only effective managers can perform. Women entrepreneurs are not very efficient at the managerial functions of planning, organizing, coordinating, cooperating and staffing. This inability makes it a problem for them to run an enterprise.
Since it is culturally wrong for women to run around collecting money and conducting distribution and marketing, they use middlemen to hand those errands for them. Middle men tend to exploit the women in the disguise of helping. The middlemen add their own profit margin which results in less sales and lesser profits.
Women sometimes have to give up running an enterprise to strike a balance between home chores and running a business.
A few years back Indian entrepreneurs had to fight national competition. Things have however changed and entrepreneurship is more complex than before. Almost all countries are trading in the global market. Now the Indian entrepreneurs have to global competition as opposed to regional and national competition. To compete at a global level, these entrepreneurs have to come up with new innovative ways. They need these innovative skills and ideas to gain a place in the global market. Multinational businesses have the infrastructure and money to invest in transformations. They can afford experienced employees and managers (Roshni 2011). This puts a challenge to the Indian entrepreneurs to improve all their departments of business such as marketing, business and finance. They are forced to use the new technologies and methods in an efficient manner as a motivating factor to the manpower that is brought by the competing multinational competitions.
Liberalization is the process of giving freedom to do what an individual pleases. India was granted economic liberalization in 1991. This liberalization was meant to promote economic growth in India. Initially, liberty was granted to private entrepreneurs to start any business of their choice. Liberalization brought many new businesses and entrepreneurs. The challenge with liberalization is what to do with the freedom. Some of the entrepreneurs have a problem taking advantage of liberalization. However, Indian entrepreneurs can beat the enormous competition by focusing more on the selling unique and high quality services at the lowest of prices.
2.2.5 Adapting to modern technology
In today’s world, science and technology have developed in a vast arena. Technology not only improves the quality of goods being produced but also reduces the cost of production. The reduction in cost increases the process of production. Faster and low cost productions create a highly competiti8ve environment. The Indian entrepreneur needs to keep pace with the changing and emerging technologies. With emerging technologies comes the extra costs that are associated with training employees to use the new machines. Training employees to use new machines is expensive both in time and money. The staff members may take longer than necessary to adapt to the new machine thus reducing production.
2.2.6 The workforce in India
The workforce in India has remarkably changed. Male domination in the work force has drastically decreased. A new era of highly educated Indian women have entered to work in the companies. Women in India have risen above cultural barriers to work as managers and efficient employees. They are said to be more efficient than their male counterparts (Ayadurai, 2005). This new development in the industry has brought new challenges to the Indian entrepreneurs. The entrepreneurs are tasked with providing an environment that the women can work in. The entrepreneurs should provide better working conditions and other facilities for the women to work in.
The entrepreneurs are also facing the greatest challenge with the younger generations. The young are graduating college full of ambitions and dreams. They are out to change and transform the world. The young managers are restless to achieve the golden dream. They should be motivated and made enthusiastic. Most of the young workforce does not want to tire but want to leap the fruit of hard work. These young people leave college with an illusion of changing the world. The entrepreneurs face the challenge of developing and training these young minds and motivating them to work effectively without fearing getting tired.
2.2.7 Marketing challenge
Marketing is one of the major challenges faced by entrepreneurs around the world and India is no exception. Each company has formulated new techniques to market their products for better economical growth in the company. High pressure salesmanship is used together with intensive advertisement. Advertisements are done through popular media such as television, radio or the internet. The entrepreneur has to an experienced and efficient marketing team. The entrepreneur has to motivate the team in order to get a bigger improvement in the business. The entrepreneur must offer must offer training to develop the team to an efficient and effective capacity. Motivating a marketing team involves paying them bigger salaries. The entrepreneur must make sure that their marketing initiative targets their customers. Marketing must be tailored to attract customers and entertain them. The entrepreneurs must ensure that their marketing mix is geared towards meeting the consumers’ needs.
2.2.8 Managing the finance of business
Finance is the heart of a business and can either make it or break it. Over-capitalization or under capitalizations are harmful to a business. Managing finance of a business is a big challenge for an Indian Entrepreneur. He must manage the fixed and working capital properly. The entrepreneurs must borrow money from the right source and manage their cash flow properly. An entrepreneur is challenged with managing their cash (Roshni et al., 2011). He must also take steps to provide for and avoid bad debts. The entrepreneur must provide enough depreciation for his fixed assets.
2.2.9 Production challenges
Entrepreneurs in India face many challenges in the field of production. They have to replace all the redundant and obsolete machines. They must provide good training to their production staff, use quality raw materials to produce quality goods and services. The entrepreneurs must ensure that a good inventory system is in place. This is to avoid blocking working capital with overstocking or blocking production but under-stocking. The entrepreneur must ensure Total Quality Management to ensure that their finished products are quality products.
2.2.10 Balancing social and economic objectives.
Entrepreneurs are tasked with balancing high profits and being socially responsible. Corporate social responsibility is the process by which a company gives back to the society. Corporate social responsibility involves the use of environmentally friendly processes to produce. Corporate social responsibility is also about donating to community based causes and communal causes. An entrepreneur must also ensure that they pay all their taxes and duties to the government. This is legally responsible.
2.2.11 Social challenges
Family challenges are at the top of social challenges. Family is prioritized by Indians. Businesses are left to family even if they do not have a professional training in business.
2.2.12 Technological challenges
The education system of India lags behind too much and it even lags behind too much when it comes to online entrepreneurship. On a technology front, entrepreneurs cannot compete with their competitors from other nations.
2.2.13 Online businesses
Online entrepreneurs find it difficult to secure payment from online models. Many small and medium business people do not understand the online business model (Roshni et al., 2011). The online entrepreneurs who need funds from this people end up not getting any.
2.2.14 Teaming challenges
Indians are more geared towards working in big established companies than working in small startups. Entrepreneurs in India have a hard time finding the right people moving in the business (Santhi, 2011).
2.2.15 Motivation and dedication
Indians experience several barriers before entering the working environment. Organizations thus need to treat their employees in a good manner to motivate them. Entrepreneurs should therefore make more activities that motivate and make them more dedicated when entering into business (Santhi, 2011).
A big percent (46%) of Indians says that the government makes it hard for them to be entrepreneurs. One of the contributions to government inefficiency is corruption. Corruption results in high cost and low efficiency of starting a business. A corrupt business community also gives business owners the freedom to do unscrupulous things and this exacerbates the lack of entrepreneurs among Indian public.
One of the most helpful factors to becoming an entrepreneur in India is the access to funding. In the past few years, Indi has attracted the attention of global investors. However, these entrepreneurs find it extremely hard to secure funding to start their businesses. The other problem in funding is the disconnect between local entrepreneurs and investment funds. Foreign investors could make an assumption of funding institutions and their arrangements based on their experience back at home.
Entrepreneurs in India require to be mentored and motivated. Such motivation can come from high profile business men who have been able to overcome entrepreneurial challenges. Entrepreneurial education should also be further introduced in the education system. Quality educators should be availed to enhance entrepreneurial growth in India.
There lacks a judicial system to protect relationships between business partners and entrepreneurs or between customers and entrepreneurs. Thus trusting relationships cannot be established between both groups. Lack of trust inhibits collaboration. It is therefore necessary to enforce agreements and protect trusting business relationships.
Skilled manpower is necessary for an entrepreneurial environment in India. Manpower is abundant in India but its quality is poor. The driving factor is the security and safety of the government sector as compared to working in the private sector. The youths in India are ill prepared to work in startups. Skilled manpower is needed in India for the sustainability of an enterprise.
Security should also be increased in India to reduce chances of uncertainty by investors. Investors want to work in an environment that they feel their enterprises will be sustainable. The Indian government thus has to ensure it offers a politically stable environment and a secure environment for the entrepreneurs.
Gender equality has to be implemented since it is in the constitution. Women have to be capacity built and provided with an environment that will allow them to be entrepreneurs. Credit facilities that are for women need to be established to allow women to borrow funds from them for entrepreneurial purposes.
Today’s promising market conditions have been very encouraging to may young engineers. Who believe they have technical knowledge to be entrepreneurs. These youngsters believe that they have the skills and technical knowledge to attract new customers.
Elimination of obstacles for women requires to be focused on changing the traditional attitude and mindsets of people in the society other than being limited to creation of opportunities for women.
Cottage industries should also be promoted in India. This requires less capital and employs a lot of people. The cottage industry uses raw materials that are locally available thus can beat the financial and funding challenges that are associated with starting a business in India.
Trade barriers ought to be created for importers bringing in products that India produces. This will limit the number of imports and increase the chances of internal investments. Trade barriers will also reduce the competition for domestic products and motivate investors.
The government should provide special infrastructure facilities for women and provide them with the facilities to start businesses. The government should arrange special training programs of women entrepreneurship. Illiterate women especially will benefit from such training and will be in a position to start up a business based on the trainings they will acquire.
The government should also facilitate top ranking women entrepreneurs. These women can be used to motivate their fellow women to join the world of entrepreneurs. These women should be encouraged to be more efficient and competitive and efficient and effective at an international and local market. Indians should also invite successful business women from foreign countries to come speak to the women in India. This would motivate them even further to be entrepreneurs.
People in the rural areas should be provided with the require facility to allow them to compete at a global level. They should not be marginalized and discriminated against in terms of allocation of facilities. Roads should be constructed in the rural areas to enhance accessibility of these areas and reduce transportation cost incurred by business people. Credit facilities and other utilities should be located centrally in the rural areas to allow entrepreneurs to borrow money.
After the economic liberalization of 1991 business in India made a tremendous revolution. Entrepreneurs were allowed to invest in whatever they pleased. This revolution was the pivotal point for the increase of investment in India. Globalization is another factor that has bitter sweet consequences. Globalization from a national perspective has a positive impact on entrepreneurship in India. However, entrepreneurship barriers need to be removed to increase entrepreneurship and maintain a steady economic growth in India. The government should also provide an environment that promotes entrepreneurship.
Challenges should be turned around to be opportunities. Women entrepreneurs have the opportunity to free entry in into world trade. They should take advantage of improved risk taking abilities. The government of India is likely to withdraw restrictions for women to ensure gender equality in business. This is an opportunity for women to take care of them.
There are technologies and inventions spread all over the world. Entrepreneurs in India should take advantage of these inventions to start up businesses and run them effectively.
Ayadurai, Selvamalar , (2005), An Insight into The Constraints Faced by Women Entrepreneurs in A War-Torn Area: Case Study of The Northeast of Sri Lanka, presented at the 2005 50th World Conference of ICSB Washington D.C
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ENTREPRENEURSHIP IN INDIA 19
Running head: ENTREPRENEURSHIP IN INDIA 1
Attitudes of for-profit Companies towards Social Entrepreneurship and Social Enterprises
The concept of social entrepreneurship is blended as business discipline, determination, technology, innovation and passion. This is aimed at achieving the social mission of the business which is defined as tackling the existing social challenges. However, not all businesses have been able to strike this balance among them; government agencies and philanthropic organizations (Grant & Perren 2002, p. 186). Several social sector institutions are regarded as less effective, ineffective and ignorant to the social challenges that need their responses. In order to create a new century, social entrepreneurs need to come up with new social models that are more effective and socially oriented (BSR 2006, p.
29). The term social entrepreneurs refer to a sector of boundaries which more than often are blurred applying innovation in non-profit making projects. Social ventures which are profit making such as banks, social commercial entities and hybrid corporations like shelters that train residents in order to enable them get employment or start their own business ventures can also be categorized as social entrepreneurship. Social entrepreneurs therefore apply the most effective social systems while trying to achieve their social missions (Baughn, Cao, Le, Lim & Neupert 2006, p. 34).
Currently, more people are highly enlightened on social entrepreneurship and social enterprises. However, their capacity of understanding either of the social entrepreneurship and social enterprises concepts and aims still differ diversely. When an individual is termed as an entrepreneur, it means implies that, the person is a business owner after undergoing several processes and steps in establishing and ensuring it’s operations. Therefore, they can be said to be people who contribute towards economic growth through innovation and movement of resources from a location they are underutilized to an area their productivity is fully utilized and reflected through the large quantities of harvested yield (Baron 2007, p. 23).
An entrepreneur is thus, a creator of value addition in the supply chain through economic resources and an innovator who ensures the creative-destructive capitalism procedure is continuous and consistent. They reform or help in evolution of a production pattern and steps by; utilizing an invention, through their technology abilities, supplying materials required and appreciating a reorganized and competent industry (Baron 2007, p. 24). This definition of social entrepreneurs by Schumpeter portrays them as agents of economic change because they create new markets, diverse means of production and ways of serving the economy in order for it to grow and develop.
Schumpeter added that, not all people who start a commercial venture in order to earn a profit are entrepreneurs. They have to be innovators and foster economic growth in order to be accepted in the entrepreneurial category (Schumpeter 2002, p. 34). A social entrepreneur should be defined in relation to market disciplines which ensure; resources are utilized, productivity is accounted for, value is created, innovation as evidence, economic growth is witnessed and opportunities are available to public who want to venture into social entrepreneurship (Chell, Haworth & Brearley 2001, p. 82).
Differences between a Manager and an Entrepreneur
Roth and Stewart revealed that, risk propensity undertaken by entrepreneurs are relatively higher than that undertaken by managers. Risk propensity refers to a person’s willingness and positive attitude to pursue or act in a certain manner in order to achieve business success without guarantees. The uncertainty among entrepreneurs when conducting various business actions is based on a decision making procedure which does not guarantee them of benefits or risk free results once they implement the policies or decisions (Hao, Scott & Lumpkin 2009). Roth and Stewart therefore concluded that, compared to managers, entrepreneurs are highly motivated individuals who aspire to accomplish their goals and objectives despite of the possible risks they are likely to face (Jay & Gillian 2006, p. 33).
Five Factor Model of Personality in Entrepreneurship
A model known as the Five Factor Model of personality (FFM) was applied by Zhao and Seibet while categorizing managers and entrepreneur’s personalities and status. This model stipulates that, an entrepreneur’s management and planning skills, self motivation and control, acceptance and respect to traditional business norms and customs, virtues, responsibility in the business world are highly regarded more than those of managers (Zhao & Seibert 2006, p. 263).
In addition, their openness, creativity, imagination, business curiosity, intellectual, respect to business standards, emotional stability and reliability, level of experience and agreeableness in terms of good behaviors and positive attitude were traits highly rated among entrepreneurs than managers. This was an indication that, managers and entrepreneurs differ in personality traits though scholars have failed to expound on these differences. Baron stated that, the first vital step achieved by entrepreneurs is gaining business management skills (Amira, Panayiotis & Robert 2012, p.12). The second step which is influenced by a person’s ability to carry out entrepreneurial activities is the firm’s performance. It was revealed that, achievement of a successful entrepreneur may opt to employ a manager for the business in order to concentrate on other aspects of the trade while unsuccessful entrepreneurs may decide to abandon their business venture rather than employing creativity and imaginative skills in order to sustain its operations (Chell 2000, p. 76).
The modern economic growth and development is therefore hugely influenced by entrepreneurial skills, traits and personalities as they affect the decision and policy making procedure while conducting business. When entrepreneurs fail to achieve their goals, the consequences are felt in the society and country at large. Social entrepreneurs not only utilize available opportunities but also the resources at their disposal (Kourilsky & Walstad 2008, p. 79). When social entrepreneurs fail in either or both, their financial positions are compromised which also destabilizes their psychological status and the entire society’s economic status. People are attracted to social entrepreneurship for different reasons depending on their understanding of its concepts, requirements and personal traits (Caird 2000, p. 45).
Type of Social Enterprises
Within the Irish economy, there are charities and co-operatives which in collaboration with community trade schemes both private and public, deficient demand social enterprises and ventures based on public social enterprise contracts form the entire Irish social economy. Community trade schemes are mainly financed from traditional capital. Deficient demand ventures are established based on a community’s demand of particular commodities which mainly are not easily available based on resources at their disposal or low density population size (Stewart & Roth 2001, p. 148). Contractual ventures mainly deal with acquisition of public sector disbursement in undeveloped locations and promoting trade ventures in those areas. While categorizing these enterprises, O’Hara highlighted the five factors to consider; credit unions, housing co-operatives, work integration among society members, labor force and groups, provision of personal and proxy services and local development groups (Elizabeth 2007, p. 126).
A social enterprise in Europe and other countries is a venture established from legal forms that have existed for a long period of time. They are in form of associations, limited companies and co-operatives. Social enterprises are sovereign in conducting legal trade ventures though some enterprises are conducted in respect to existing traditional business legal requirements. Social enterprises create social markets which foster socio-economic growth in individual countries. The most common and dominating type of social enterprises in Europe are known as Work Integration Social Enterprises (WISEs). WISEs seek to reduce unemployment rate and promote economic growth and development in respective countries.
Unqualified job seekers together with people who have low qualifications face the risk of being irrelevant in the job market (Gregory 2001, p. 11). They are integrated into the job market as a way of ensuring their productive skills are utilized and beneficial to the society. WISEs also seek employment for disabled people unable to get long term contracts due to their needy conditions which leave them disadvantaged in the job market. Other countries where WISEs are found to exist and function include Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Poland, Sweden, Portugal and Europe (Feldman, Koberg & Dean 2001, p. 27).
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Wa’ed Program in Saudi Arabia
Wa’ed Program in Saudi Arabia
Wa’ed, also known as the Saudi Aramco Entrepreneurship Center, is an initiative that was started by Saudi Aramco in 2012 to spearhead in developing local entrepreneurs. The program was created to fund and incubate new businesses in Saudi Arabia. Wa’ed is a Limited Liability Company (LLC) and is part of the country`s program towards diversification of the economy, commercialization of intellectual property rights and patents, and developing opportunities in the private sector (Waed.net, 2013). As part of its objectives, Wa’ed was intended to spread entrepreneurship culture in Saudi Arabia. Other than creating new employment opportunities, Wa’ed promotes growth, innovativeness, and development of the Saudi Arabia`s national economy. The success of the program will continue to provide encouragement to the youths in Saudi Arabia to come up with innovative and creative ideas, and approach Wa’ed for support in developing business plans and securing business capital. The resources and competences that have resulted from earlier projects have been and will continue to be reinvested in new projects. This will continue to improve the Kingdom`s entrepreneurship. The program targets small and medium-sized enterprises in addition to impact entrepreneurs. It provides them with non-collateralized loans and equity financing through its venture capital. The mission of the program is to promote sustainable growth of small and medium enterprises, and expand the pool of entrepreneurs to develop an entrepreneurial ecosystem in the kingdom of Saudi Arabia.
Wa’ed offers support to entrepreneurs from particular industries that include Information and Communication Technology, and education, particularly special programs that provide exceptional educational opportunities. It also supports businesses in healthcare, chemicals, supply chain & logistics, manufacturing, and energy related products and services, in addition to unique Industrial Opportunities. Small and medium enterprises that have the potential to contribute to the Saudi economy and employment creation are considered by Wa’ed. The company uses the following benchmarks in choosing businesses that qualify for funding:
Products and services that add value and provide patented and innovative solutions
Businesses that enhance competitiveness in sectors that are not yet saturated
Businesses that help in creating employment and provide quality employment opportunities for Saudi people
Businesses that do not depend on imports and possibly export their products or services
The Wa’ed training programs are designed to deliver effective transfer of knowledge to entrepreneurs, particularly the skills necessary for effective business planning. As part of the Wa’ed procedure, entrepreneurs undergo through a prequalification process to ascertain whether their business plans satisfy all the above requirements (Saudiaramco, 2013). If a business plan requires additional development, the entrepreneur gets an invitation to participate in the Wa’ed business skills and business plan development training program. The training program takes five days and is organized on a monthly basis. In the first three days of training, entrepreneurs are trained on risk management, business plan formulation, industry analysis, market segmentation, competitor analysis, breakeven analysis, analysis of cash flows, legal aspects, and organization skills. On the last two days, entrepreneurs practically apply the knowledge acquired. The participants begin formulating new business plans with the support and guidance of the training team. Training programs are conducted in Jeddah, Riyadh, and Dammam (Saudiaramco, 2013).
The program has helped in addressing the challenge of risk aversion that was so predominant among Saudi youths. In the past, many talented garduates in the kingdom have to the big corporates seeking secure employment. The Wa’ed program has its own business incubator- the Wa’ed Startup Lab at the King Fahd University of Petroleum and Minerals. This incubator has significantly helped the country in addressing the risk-aversion challenge that has impeded entrepreneurship in the Kingdom. In august 2013, Wa’ed Startup Lab initiated a pioneer program dubbed CO-OP to Entrepreneur that permits senior university students who have innovative ideas to form groups and start business ventures as part of their college program (Wamda, 2013). This initiative has created an environment free of failure for start-up ventures. Secondly, Wa’ed receives significant support from experienced mentors and companies, such as Microsoft that provide technical support. In addition, the program accords entrepreneurs with significant networking opportunities with best players in their respective industries (Wamda, 2013). In addition, the Wa’ed program has various long-term benefits that include using a bottom-up approach in promoting entrepreneurship, providing unmatched internship experience, and developing potentially successful firms that will help the kingdom in diversifying its economy and boost employment opportunities. Furthermore, although the Wa’ed Startup Lab currently supports all the six student-initiated startups at King Fahd University of Petroleum and Minerals, plans are underway to roll-out start-up programs in all Universities in the kingdom; this will ensure business incubation and employment creation in all parts of the kingdom. In addition, Wa’ed seeks to establish a vibrant global network entrepreneur who will share, grow, and learn from one another. Finally, the broad range of support services that Wa’ed provides to the Saudi economy, which include equity and debt financing, business mentorship, and development training, in addition to high quality business incubation continue to foster entrepreneurship across the Kingdom.
The major shortcoming of the Wa’ed program is that it does not support entrepreneurs from all sectors of the economy. In particular, entrepreneurs in trading businesses, general construction contractors, retail shops, general hospitality industry, automobile repair and maintenance businesses, not for profit organizations, and tailoring and fashion related businesses are automatically disqualified from Wa’ed financing and support.
Comparison between Wa’ed Program and the Khalifa Fund in the UAE
Like the Wa’ed Program, the Khalifa Fund in the United Arab Emirates was initiated in 2007 to help local entrepreneurs in Abu Dhabi, with a capital outlay of AED 2 billion (Khalifafund, 2013). Like the Wa’ed Program, the Khalifa Fund seeks to develop a new generation of entrepreneurs in the UAE by creating and sustaining a culture of investment among the youths, in addition to supporting and developing SMEs in the Emirate through debt financing. However, unlike Wa’ed Program that only supports start-up businesses; the Khalifa Fund provides support for business expansion as well. In addition to development and training, the Khalifa Fund also offers data and consultation services, in addition to various marketing initiatives. Similarly, unlike the Wa’ed Program that provides one type of loan, the Khalifa Fund has three financing initiatives that include Zeyada (expansion loans), Khutwa (Micro-Finance), Bedaya (start up loans) and Tasnea targeting industrial and economic diversification. Furthermore, unlike Wa’ed that does not provide support to particular sectors of the economy, Khalifa Fund supports all viable projects that contribute to economic growth. The fund provides support for special interest groups through programs, such as Amal targeting Emiratis with special needs, Al Radda that supports inmates in correction centers, and Ishraq that supports those recovering from drug addiction, the National Rehabilitation Centre (Khalifafund, 2013).
Khalifafund (2013). Welcome To Khalifa Fund For Enterprise Development website. Retrieved on 10 December 2013 from: <https://www.khalifafund.ae/En/HomePage/Pages/default.aspx>
Waed.net (2013). About us. Retrieved on 10 December 2013 from: <http://www.waed.net/English/Pages/About-us.aspx>
Wamda (2013). Wa’ed Startup Lab – A New Breed of Incubators in Saudi. Retrieved on 10 December 2013 from: <http://www.wamda.com/a-naimi/2013/09/wa-ed-startup-lab-a-new-breed-of-incubators-in-saudi>
Saudiaramco (2013). Wa’ed: Boosting the economy. Retrieved on 10 December 2013 from: <http://www.saudiaramco.com/en/home/news/latest-news/2011/wa_ed–boosting-the-economy.html>
WA’ED PROGRAM IN SAUDI ARABIA 7
Running head: WA’ED PROGRAM IN SAUDI ARABIA 1
According to Stevan Harrell, why do the Chinese work so hard? How convincing do you find his arguments for an ‘entrepreneurial ethic’ in China
Chinese people are known to be among the most industrious people in the world and this is attributed to the fact that they have a work ethic. They are known to work for long hours and accomplish their obligations within set target times. The reason why the Chinese are so hardworking can be attributed to various reasons including the following.
It is the culture of the Chinese people to work hard. This concept of working hard started long time ago and generations after generations have been practicing the habit such that it has become part of the culture of the Chinese people. They have therefore stereotyped work such that it has now been linked to them and has become a characteristic when one wants to identify the Chinese. The Chinese are diligent people and even the old and the rich do not retire from work, but rather devote themselves to work as if they were poor. This habit therefore has made the Chinese to embrace the aspect of working hard.
Another factor that makes the Chinese work so hard is because they are industrious and diligent. This is attributed to the fact that they are humble and determined to achieve what life entails and help the society as well as their families. They are aware that social goods can only be obtained if they work hard. This social factor leads to work hard so that they are able to achieve economic betterment and long-term security of the people.
Another factor that can be attributed to the hardworking nature of the Chinese is their social setting. The socialization nature of the people is active such that everybody is willing to work to better the society. There is a collaboration culture when doing work and when undertaking other aspects of life. Though the contemporary Chinese persons are deviating from the hardworking norm, the majority still embraces the culture.
I find this convincing because the current state of China has grown enormously from a country that was once a very poor country to the current status where the country is becoming a world super country. Quoting Stevan in his journal, Listen children, there is nothing in this world that can be won easily. A piece of bread must be earned by one day’s sweat…. The desire for better food, better dress, a good time, or the easy way will lead but to the ruin of our family [Yang, 1945: 130], commander in terms of economic development and the social living of the people. This is an indication that generations and generations have been passing the idea that it is important to work hard.
Another thing that convinces an entrepreneur is the fact that the work ethics is not only limited to the Chinese few but to all the Chinese fraternity and they do it as a form of security to improve their material wealth and security. The Chinese therefore, from an entrepreneurial point of view work hard because they know that there are long term benefits associated with working. Still from the entrepreneur ethical side, it is convincing that the Chinese work hard so that they may be able to achieve material gains and security for their families.
Therefore, the Chinese people by nature are hardworking and would do anything to make their social life better. They also work hard because they are motivated by the results and benefits of working hard as this brings corporation, long-term successes as well as security in the short and long run. They are also after collective success and family wellbeing of their members and this results in their being so diligent and hardworking.
Harrell Stevan. Why Do the Chinese Work So Hard?: Reflections on an Entrepreneurial Ethic. Modern China, Vol. 11, No. 2. Sage Publications, Inc. (Apr., 1985), pp. 203-226, viewed 17/07/2013 on http://www.jstor.org/stable/188906 .
Nish, Ian, and Keith Thurley. Work and Society: Labour and Human Resources in East Asia. Hong Kong: Hong Kong Univ. Press, 1996.
Stevan Harrell. Why Do the Chinese Work So Hard?: Reflections on an Entrepreneurial Ethic. Modern China, Vol. 11, No. 2. ( Sage Publications, Inc. (Apr., 1985)), 221
Ian Nish and Thurley Keith. Work and Society: Labour and Human Resources in East Asia. (Hong Kong: Hong Kong Univ. Press, 1996), 148-149
Stevan Harrell. Why Do the Chinese Work So Hard? Reflections on an Entrepreneurial Ethic. Modern China, Vol. 11, No. 2. ( Sage Publications, Inc. (Apr., 1985)), 223
Why Chinese work so hard 3
Starting a New Business
A successful entrepreneur is the one willing to take risks and is sure of the passion, self drive and best ideas. To fulfill this, an entrepreneur ought to select a community and appropriate business site (Carree 281-289). My discussion takes us through site selection for a retail fashion boutique store.
The fashion boutique is a retail shop which will be women’s clothing store and children’s attires. As a fashion boutique owner, I will focus on retail sale of new clothes produced by style designers. The business will also as a way of increasing market niche stock up accompaniments; hats, belts both children and women shoes. Location is a huge feature to consider when starting a fashion clothing business. The location of fashion boutique is a shopping mall. In spite of high rents and a lot of competition, they are the best sites due to the flow of customers (Carree 290-291). Due to inclusion of accessories, I will look for a mall with great flow of teens to catch their attention to buy the products.
My idea is based on, the frequency of women’s tendency to purchase clothes compared to men. Also, due to their great attention towards children, they want them to be smart. Children’s clothes wear out at a high rate; hence the rate of buying is also high. The population of women is still high considering the demographic survey. The prospective market of shopping mall is an important element in choosing the business location. The direct customer’s touch and enticements will help the fashion clothes business reach the peak. Also considering regulatory oversights surrounding, permits, health and security, brought the development of the idea of a mall as an ideal business site.
Carree, Martin, et al. “The relationship between economic development and business ownership revisited.” Entrepreneurship & Regional Development 19.3 (2007): 281-291.
Entrepreneurship and Small Business Management
In most instances, entrepreneurship and small business management are mistaken to mean the same. However, an in-depth analysis of the two terms portrays that indeed there is a difference between the two terms.
The risk incurred by the two entities is a common difference between them. An entrepreneur incurs the risk of losing the initial capital invested in business since he is the one who started the business (Hill, 2013). An entrepreneur needs to come up with the startup capital required to commence business operation. Therefore, if things go sour then he will lose the capital invested.
Conversely, a small business manager faces the risk of losing market share to the competition (Hill, 2013). A small business manager joins the business once it has been stabilized and is in need of growth. Therefore, a small business will only face the risk competitors in the market put up against the business. He, therefore, does not stand to lose any capital invested in the business.
Another difference between the two entities is the skill set required from them (Hill, 2013). In order for an entrepreneur to be successful, he requires an unusual vision. He needs to be able to analyze the market and determine the needs that are not satisfied with the current market. Moreover, he needs to come with the right product that will satisfy the utility of the market. A small business manager does not require an exemplary vision rather he requires operation efficiency. This means that he needs to implement policies and procedures that reduce the operation cost of the business while maximizing returns.
According to the above differences, it is clear that an entrepreneur is somewhat different from a small business manager. The risk incurred by both of them and the skills required to perform their duties are the differentiating factors.
Hill, B. (2013). Difference Between Entrepreneurship & Small Business Management. Retrieved Octomber 12, 2013, from Houston Chronicle: http://smallbusiness.chron.com/difference-between-entrepreneurship-small-business-management-53370.html
ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT 2
Running head: ENTREPRENEURSHIP AND SMALL BUSINESS MANAGEMENT 1
Saudi Women Innovation and Entrepreneurship: Success, Challenges, and Policy Responses.
Background and Rational
Their participation in economic duties and opportunities has increased across various economic sectors. Riyadh women engaging in entrepreneurship is listed as a success towards more female undertaking economic participation. More so, Islam now allows women to work and engage in public roles and duties. There however lacks data with regards to the exact number of women undertaking economic duties such as entrepreneurship and innovation among other roles and responsibilities across Saudi Arabia. Studies indicate that, a group of ten male entrepreneurs and innovators can only be represented by one female. Women in Saudi Arabia are therefore under-represented with regards to their economic participation, roles and duties as well as contributions. More so, they face various challenges especially gender based obstacles hindering them from undertaking full economic participation. Traditions and regulations prohibit and prevent women to venture into business although statistics indicate that, those who actually undertake commercial roles make pillions of profits (Kelly and Hessah 3).
Entrepreneurs and innovators across the global business platform face different and diverse issues and challenges irrespective of gender. These challenges include; lack of adequate resources to start a business venture, limited access to financial resources, problems in attracting and retaining customers and poor management of cash flows from the venture as well as corruption, limitations from cultural heritage and inaccessibility to technologies. Saudi Arabia in the Middle East is globally recognized for its entrepreneurship roles while practicing Muslim religion and culture. For a long period, women have been prohibited from undertaking entrepreneurship and innovative roles among other responsibilities increasing their level of participation on the public. Instead, the country’s economic sectors are mainly undertaken and managed by Saudi men while highly depending on the extensive oil and gas industry (Angela, Joanne and Elizabeth 30).
Why is starting an economic business venture not a high priority for Saudi women?
How easy is it to start, register and conduct a business venture in Saudi Arabia as a woman?
These two questions will be important in reviewing how women in Saudi have managed to overcome cultural and economic challenges to commence and increase their participation in entrepreneurship and innovative commercial and economic ventures.
Theoretical resources drawn in this research include previous studies conducted on Saudi women. A complete and comprehensive historical construction on women roles, limitations, and challenges as Saudi citizens wishing to contribute positively to the country’s economy are several. Kelly and Hessah asserted that, in the past Saudi women were not keen on entrepreneurship and innovation. They did not regard entrepreneurship and innovation as a priority. This was due to lack of clear and enforceable commercial policies aimed at promoting their participation. There lacked clear policies stating and promoting women to undertake roles and responsibilities in innovative and entrepreneurship economic sectors (Kelly and Hessah 5).
Conversely, Dorothy stated that male domination in Saudi Arabia’s economic sectors can be attributed to custom and cultural issues. They prohibit women from starting and running an economic venture. Women from Saudi Arabia are generally denied various freedoms as they are regarded as attacks to moral values and traditional cultures. As a result, women avoided to undertake entrepreneurship and innovative public roles as an honor and respect to their custom and cultural heritage (Dorothy 7).
Data and Data Collection
Data applied in this research was collected from various journal articles. The journal authors conducted surveys, observations, and interviews among women in Saudi Arabia to understand why they feel challenged to be innovators and entrepreneurs. It is evident that, in the past women felt it was culturally and customary wrong to publicly participate as entrepreneurs and innovators. Saudi women interviewed asserted that, the Islam religion and culture does not allow a female to publicly participate especially in economic sectors where only male gender is allowed to dominate.
Angela, Hung, Joanne Yoong and Elizabeth Brown. Women and Financial Literacy OECD/INFE Evidence, Survey and Policy Responses, OECD Working Papers on Finance, Insurance and Private Pensions, 2013. Print.
Dorothy, Minkus-McKenna. Women Entrepreneurs in Riyadh, Saudi Arabia, University of Maryland University College, 2009. Print.
Kelly, Lavelle and Hessah Al Sheikh. Giving Voice to Women Entrepreneurs in Saudi Arabia, Ashridge Business School, Women’s Entrepreneurship Initiative Report, 2013.Print.