CS Foundation Growth and Challenges of Entrepreneurial Venture Notes
→ Planning in emerging firms:
Main objective of business planning is to provide and implement business plans. Two elements of business planning
→ Strategic planning:
This used to be called “long-range planning”. The term “strategic planning” is now used to express the analytic and comprehensive elements of this type of planning. The strategic plan aims to focus an organisation’s vision and priorities in response to a changing environment and to ensure that members of the organisation are working toward the same goals. The planning process encourages organisations to re-examine their established directions and strategies for contemporary relevance and practical results, asking questions like Do we need to change our mission? Have the needs of our target community changed?
→ Operational planning:
Operational planning translates your high level strategic plan into a more detailed plan of who will do what and when. Operational plans usually relate to the short to medium term, maybe one to three years and may relate to your whole organisation, or a particular project or area of work or day to day affairs.
→ Entrepreneurial opportunities and economic development:
- Entrepreneur plays an important role in the economy. These are the people who are not only providing employment for themselves but for others also.
- Entrepreneurship and economic growth are very closely and positively linked together. An increase in the number of entrepreneurs leads to an increase in economic growth. This effect is a result of the concrete expression of their skills and more precisely, their propensity to innovate. Through his innovative activity, the entrepreneur seeks to create new profit opportunities.
- These opportunities can result from productivity increases, in which case, their relationship to economic growth appears quite clearly. Therefore, more entrepreneurs means more growth, which in turn leads to more entrepreneurs. The phenomena seem to be self-feeding. Entrepreneurs are promoted by giving them tax incentives and other facilities which gives an encouragement.
Looking at the past of entrepreneurship Adam Smith, David Ricardo and Stuart Mill termed entrepreneurship by the term “business management”. It was Alfred Marshall who first recognized the entrepreneurship. Marshall’s entrepreneur should be able to foresee changes in supply and demand. On the other end Knight claims that an entrepreneur will be able to bear the risk in case it sees the chances of profit. Modem school of thought the role of entrepreneur is that of innovator.
But in less developed countries entrepreneurs are not innovators but actually they imitate the things made in developed’countries. This process which occurs in developed countries also is called creative imitation.
→ Basic types of Entrepreneurship:
Entrepreneurship may be classified as:
- Opportunity based Entrepreneurship: Such entrepreneur perceives a business opportunity and chooses to pursue it as an active career
- Necessity based Entrepreneurship: Such entrepreneur is entrepreneur by compulsion and not by choice.
→ Creating Indian Entrepreneurship:
After liberalization, business opportunities in India were manifold. A good number of entrepreneurs seized them and grew from small-scale contractors to large real estate developers and from distributors to manufacturers. Success became the result of efficient capital allocation, strong execution and a customer orientation.
These entrepreneurs needs to nurtured. For the development of entrepreneurs India should look into four areas o Creating the right environment – In India the business of an entrepreneur starts on very little capital. Initial investment is with the help of friends and family unlike developed countries where the idea of an entrepreneur takes shape with the help of a venture capitalist and in a large form. India has to create some of the areas of excellence so that the entrepreneurs from this field can develop and gr’ow like IT industry so there should be proper education facilities provided so that more and more people can come up and take over in this field o Ensure that entrepreneurs have access to right skill – an Indian entrepreneur has no access to proper skill as per a survey conducted.
Thus education system has to be reformed so that more and more skilled entrepreneurs come.
o Entrepreneurs should have access to Smart Capital – One of the basic requirement for any business, although venture capital has entered into our market but still there is deficiency. More of VCs are required, o Networking – There should be a proper networking facility so that entrepreneurs can get in touch with each other.
→ Financing Entrepreneurial Business:
Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. In this particular context of the current economic crisis, entrepreneurship seems to offer a fundamental solution to create jobs and growth, but at the same time the crisis has induced a tightening on credit that affects negatively innovative SMEs. Some of the finances thought required are-
- Resource assessment: an entrepreneur should firstly allocate the resources from where he can get finance. It could be loans, self finance etc.
- Working capital: this by far the biggest capital requirement for a business. Working capital requirement for a factory could be more then a service industry, o Funds flow – it is a day-to-day funds requirement
- Sources of finance: there are two types of sources of finance which are internal or external. External may be finance from friends, relatives or banks etc. o Means of finance – means by which budget deficit is financed or surplus is used.
→ Growth and challenges of Entrepreneurship:
- Entrepreneurship is a core area of expertise in today’s dynamic economy; particularly managing innovation, risk, uncertainty and growth.
- Entrepreneurship is unique because it is fully engaged in cutting edge knowledge relevant for ambitious owner managers derived from both practice and research at every stage of a new venture’s development.
- An entrepreneur is someone who is willing to bear the risk of a business venture where there is a significant chance for making profit. Entrepreneurship is basically the practice of starting a business in order to earn profit on new found opportunities. Entrepreneurship is a challenging task as many businesses which start fail to take off
When organisation grow they face following things to survive
- speed and uncertainty
- changing technology
- loyalty will erode
- demographics will dictate
- employment will disappear
- work will be done anywhere, anytime
A constant modernisation will be required in the business with the passage of time. First step towards for this modernisation will be research of the pros and cons of production, second will to have a look at the finance resources cause every modernisation requires money and the last one is to have an approach towards modernisation.
In order for data to be useful, you must analyze it.
Analysis techniques vary and their effectiveness depends on the types of information you are collecting and the type of measurements you are using. Because they are dependent on the data collection, analysis techniques should be decided before this step.
In business meaning growth and expansion are two different terms.Growth is having the connotation of an interenal or vertical surge whereas expansion refers to external or horizontal growth such as that exhibited by a firm that successfully engages in mergers and acquisitions.
The term ‘diversification’ means the introduction of a new product or service to meet the needs of an old market. Expansion, modernisation, diversification all attempt to increase sales and expansion of sale is a key goal in firm’s growth phase.
→ Marketing Research Report:
The marketing research process culminates with the research report. This report will include all of your information, including an accurate description of your research process, the results, conclusions and recommended courses of action.
- The report should provide all the information the decision-maker needs to understand the project.
- It should also be written in language that is easy to understand. It’s important to find a balance between completeness and conciseness. You don’t want to leave any information out; however, you can’t let the information get so technical that it overwhelms the reading audience.
- One approach to resolving this conflict is to prepare two reports: the technical report and the summary report. The technical report discusses the methods and the underlying assumptions. In this document, you discuss the detailed findings of the research project.
The summary report, as its name implies, summarizes the research process and presents the findings and conclusions as simply as possible.
- Another way to keep your findings clear is to prepare several different representations of your findings. Power Point presentations, graphs and face-to-face reports are all common methods for presenting your information. Along with the written report for reference, these alternative presentations will allow the decision maker to understand all aspects of the project.