Strategic Business Management and Its Comparison to the Case of iCreative - Research Paper Example

Introduction iCreative Jewelry is a new venture that was launched in USA in 2009. This new venture has shown exponential growth after first year of its launch. There are various established designers who have been operating in the industry of branded jewelry however iCreative has an edge of manufacturing hand-made ornaments by using highly trained professionals. Although USA has shown a declining entrepreneurial trend in past few years however, iCreative has shown tremendous growth since its inception. After three years of substantial success and highly encouraging response from customers and investors, it is planning to expand its operations domestically and internationally. For expansion of business through internal venturing and joint ventures, iCreative requires managers and leaders who posses strategic leadership skills along with market intellect and cultural awareness of foreign markets. Leadership Skills for Entrepreneurial Venture Being an entrepreneur and introducing a new concept in market requires a different approach altogether than running family owned businesses or other established organizations, be it a company or a partnership. Where every organization model requires a different leadership approach, entrepreneurship demands innovation and creativity. Entrepreneurial leaders are required to be dissatisfied with the status quo and should have ability to question imperfections and present a better alternative. For this purpose, learning ways of existing businesses and modifying them effectively is the gist of entrepreneurial leadership. Entrepreneurial leaders need to have flexibility in their approach and ability to learn continuously (Warren, 2012). Furthermore, these leaders are expected to have authenticity in their tone when they communicate. Such leaders not only share their insight but also have humility to encourage their peers and subordinates to share their views. Since an entrepreneurial model is never perfect in the inception, therefore feedbacks and ideas of a team could help this new venture. Entrepreneurial leaders are also expected to have a vision and ability to examine their organizations at different levels of businesses (Smilor & Sexton, 1996). It not only includes operational and strategic management levels but also involves capability of identifying gaps between existing and desired efficiency and effectiveness. Entrepreneurs are provided with a huge amount of advices and negative feedbacks having critical effect on business performance (Warren, 2012). It is important for such leaders to listen and evaluate such advices while examining business position in the light of new insight. For a successful business venture, it is important to have right people at the right place with right attitude. Therefore, leaders in iCreative are required to build a team that not only trusts their leaders but also share similar vision (Linjuan, 2012). For the purpose of team building, entrepreneurial leaders are expected to have ability to inspire, remain confident and exhibit commitment. Since risks and uncertainty is relatively high in such ventures therefore leaders of iCreative are expected to exhibit strong intuition. Along with basic management and traditional leadership skills, entrepreneurial leaders are desired to have clarity of new concepts, thorough analysis of existing market and relevance of new concepts in the current market (Smilor & Sexton, 1996). Therefore, such leaders are expected to analyze how new concepts and strategies will be perceived by consumers in the short-term and long-term. Such long-term effective delivery of desired results in iCreative requires persistence and execution in its leaders. Furthermore, creative business planning, community and team engagement, know-how of economic, social and environmental benefits and risk aversion are some of peripheral attributes that iCreative requires from its leaders while venturing into foreign markets. Where an entrepreneurial business is desired to be expanded internationally, having managers and strategic partners on board that possess cultural awareness, knowledge of economic and political environment of the countries where operations are desired to be expanded, are some of the traits required for strategic leadership (Smilor & Sexton, 1996). Critical analysis of available literature reveals that ability to learn, change and adapt along with natural intuition and innovation are the gist of strategic leadership (Pajunen, 2006). Organizations especially new business ventures are required to examine these strategic skills in their leaders and managers on frequent basis. For this purpose, substantial record checking while taking a manager on board and examining if they are an organization fit will do the needful. On the other hand, for existing team, methods like ongoing dialogue, annual assessment and appraisals, specific project reporting can help in evaluating leadership skills (Axelrod, 2003). Challenges Faced by International Entrepreneurial Ventures Domestic entrepreneurial ventures have different requirements than international ventures. One of the most common challenges faced by entrepreneurs and their managers is to gain financial support for such expansion (Knight & Cavusgil, 1996). Where local banks and stakeholders may provide loans and capital for domestic expansion as such business investment is comparatively secure, raising funds for international ventures can be difficult due to inherent risks. Other than financial instability, expansion in other countries involves a greater start-up cost which is later on reflected in prices. Therefore, domestic firms have an edge over international manufacturers due to lower operating costs. In addition to that, there are cultural, social and legislative barriers involved. Since these three elements vary greatly country wise therefore business model is required to be altered accordingly. With business expansion, the quality and quantity of management required also increases therefore managers are required to build a suitable skills inventory that supports this new venture (Verbeke & Wenlong, 2007). Furthermore, middle-managers are connecting link between organization’s leadership and workforce; therefore they should be well-versed with organization mission, vision and objectives and also the requirement of their role (Lurie, 1987). In order to mitigate risks and challenges mentioned above, it is important that business managers gain sufficient market intelligence and examine the feasibility of this expansion before incurring any material costs or investment (Knight, 2000). Furthermore, gaining cultural awareness through physical visits and hiring local talent can do the needful. It is important to have local managers and teams in such ventures as they will add diversity and creativity to overall business (Knight, 2000). Enquiries about legislation and regulation are important and licensing should be acquired only when business products and practices do not breach any social and ethical requirements. Sharing vision with local team and devising an organizational culture that is diversity-driven is essential for international expansions (McDougall, 2003). Once feasibility of the product in new market has been examined, major investments can be incurred after pilot release of the product. Successful initiation will help in raising new funds in future. Current Level of Entrepreneurship in USA Critical analysis of market intelligence available on entrepreneurial activity in USA indicates that current level of new business ventures has been declining in last few years. In addition to that, this ratio was declining even before recession as well. According to Kauffman Index of Entrepreneurial Activity, “The rate of business creation declined from 340 out of 100,000 adults in 2010 to 320 out of 100,000 adults in 2011, which represents a drop of 5.9 percent. This 0.32 business-creation rate translates into approximately 543,000 new businesses being created each month during the year (Fairlie, 2012, p.2)”. Furthermore, due to lack of capital, sole proprietorships are preferred instead of steady employer firms. The report has indicated that entrepreneurship varies states’ wise and also different trends are observed in local and immigrant population (Kauffman, 2013). Further research supported by Global Entrepreneurship Monitor reveals that USA has social and cultural landscape that is supportive of new ventures. In addition to that, physical infrastructure also supports these activities where physical Infrastructure refers to the presence of and access to available physical resources such as communication, utilities, transportation, and land or space at a price that does not discriminate against new, small or growing firms (Wagner, 2013). The report also indicated that most of the new businesses were discontinued due to lack of capital. In response to these factors, it can be established that iCreative has a potential of showing development in future. Since start-up costs have been incurred already and product has been established along with substantial investors on board, further finances can be made available through crowd funding. On the other hand, there are further opportunities available through new regulations such as Jumpstart Our Businesses (JOBS) Act 2012. Since iCreative Jewelry has established its name in online businesses and major retail stores, therefore obtaining bank loans on the basis of investors support is a viable option available. Hence, it can be said that iCreative can expand its operations domestically. However, initial strategy should involve aggressive marketing through social media for enhancing online business and also making strategic alliance with specialized retail stores such as Aloha Reg and Handle With Care. Where our jewelry line is hand-made and comparatively higher in costs, therefore smaller ornaments with extra readymade embellishments can be designed in order to avoid manpower costs for leading departmental stores such as Walmart. Physical presence will be dependent on pilot launch. Strategic Business Expansion While iCreative is planning to expand its business operations, it has considered various option available for strategic expansion. iCreative’s jewelry line is a hand-made product which has its niche only by following a certain production methodology. Therefore, in order to retain and maximize this edge, it is more suitable to performing internal venturing and performing strategic alliance in the form of joint ventures. In order to do so, another series of hand-made hair and dress embellishments can be launched. Since iCreative already has designing expertise and access to necessary supply chain mechanism for both new products, therefore manufacturing should remain with iCreative. The reasons for selecting internal venturing is utilizing more economies of scale and have maximum control over production and distribution mechanism (Barringer & Ireland, 2009). Although this process can be slow and require extra capital however further expansion will lead to reduction in fixed costs without incurring start-up expenditure. Joint ventures are more suitable for exploring foreign markets and also for product penetration in domestic market. Therefore forming strategic alliance with domestic apparel and hair product manufacturers will help iCreative improve its branding and also develop new product line without incurring additional expenditure (Hill & Jones, 2007). Joint ventures with foreign firms will mitigate risks that may arise due to legislative, political, social and cultural factors. Other external growth options such as mergers, acquisitions, franchising, wholly owned subsidies possess greater challenges and risks due to above mentioned reasons. Conclusion Through critical analysis of literature available on strategic business management and its comparison to the case of iCreative, it has been established that this organization needs leaders and team that share same vision and enthusiasm as its founder. On the other hand, further growth requires its managers to be culturally aware of new markets and bear necessary strategic skills such as team building, critical thinking, innovation and flexibility. Furthermore, these managers are required to bear knowledge of regulatory, political, social and economic challenges that iCreative might face while venturing into foreign markets. Physical visits and hiring local talent can help in mitigating these risks. It was also observed that despite low entrepreneurial development in United States after recession, iCreative has done substantially well due to access to financial resources, efficient and effective strategic planning and competitive edge that it has over other market players. For further expansion, it is suggested that it undertakes internal product development and joint ventures for foreign market entrance as these two strategies comply with iCreative’s culture and organizational model. References Axelrod, N.R. (2003). Chief Executive Succession Planning: The Board's Role in Securing Your Organization's Future. BoardSource. Barringer, B.R. & Ireland, D. (2009). Entrepreneurship: Successfully Launching New Ventures, Prentice Hall. Fairlie, R.W. (2012). Kauffman Index of Entrepreneurial Activity, Retrieved from http://www.kauffman.org/uploadedfiles/kiea_2012_report.pdf Hill, C.W. & Jones, G.R. (2007). Strategic Management: An Integrated Approach. Cengage Learning. Kauffman Foundation. (2013). State of Entrepreneurship, Retrieved from http://www.kauffman.org/uploadedFiles/DownLoadableResources/SOE%20Report_2013pdf.pdf Knight, G. G. & S. T. Cavusgil. (1996). The born global firm: A challenge to traditional internationalization theory. 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