Principles of Entrepreneurship based on Apple - Case Study Example

ENTREPRENEURSHIP ………………………….. College ……………………………… ……………….. Words count: 2887 Table of Contents Table of Contents 2 Introduction 2 Entrepreneurship 3 Steve Jobs: An extraordinary entrepreneur 4 Principles of Entrepreneurship 4 Entrepreneurial Function 7 Steve Jobs as an outstanding Entrepreneur 9 Entrepreneurial challenges in Computer Industry 11 Evaluative Conclusion 12 References 12 Introduction Entrepreneurship, as a root dynamic of change and development in industries, economies and societies, is a critically important holistic as well as economic function that necessarily incorporates a number of personal and professional skills such as risk bearing, innovation and creative thinking. Entrepreneurship has acquired significant attention and growing academic importance in recent years especially in today’s diverse and complex business contexts. Entrepreneurship is central pillar to economic development, job creation and social inclusion because, successful entrepreneurs are those who think creatively to find and seize hidden business opportunities by innovating the products or services and by utilizing the latest technology and human capital. This piece of research presents an understanding of the underlying principles and foundations of entrepreneurship. This paper describes the entrepreneurial functions with a view to apply with the empirical studies about the entrepreneurial efforts carried out by one of the most renowned entrepreneur, Steve Jobs, the ex CEO of Apple Inc. Entrepreneurship By analyzing various literatures about entrepreneurship, Kuratko and Hodgetts (2008, p. 5) developed an integrated definition to acknowledge critical factors included needed for entrepreneurship. According to them, entrepreneurship is a dynamic process of vision, change and creation, requiring energy application and passion towards the creation and implementation of new ideas and creative solutions. An entrepreneur is one who undertakes to organize, assume and manage the risks associated with a business organization. He is a visionary who can successfully implement change by managing resistance or other obstacles and a creator of something new. Joseph A Schumpeter, the father of entrepreneurship, viewed that entrepreneur is an innovator (Carsrud and Brannback , 2007, p. 7). According to him, he is one who finds and take an opportunity to seize it and to create a new product or service or its new variance and thus create a new marketable contribution to the economy (McDaniel, 2002, p. 57). He asserted that entrepreneurship is essentially a creative activity consisting of doing such things as are generally not done in ordinary course of business (Milonakis and Fine, 2008, p. 212). Steve Jobs: An extraordinary entrepreneur Steve Jobs, the co-founder of Apple with Steve Wozniak, is a legend in the world of technology and the main brain-force behind world’s renowned brands such as Macintosh, iPad and iPod. Steve Jobs pioneered the personal computer industry by changing the way people think about technology and innovation. When he died in October 2011 at his age 56, BBC wrote that he has been a ‘source of countless innovations that enriched everyone’s life and has made the world immeasurably better (BBC, 2011). Steve Jobs with Steve Wozniak formed Apple Computer in 1976 and they prepared the Apple –I computer for sale for $666.66. Apple’s 30 years of business history was full of highs and lows as normally expected of a technology company. When he returned to the company in 1997, it started making Apple’s big resurrection (Shontell, 2011) and the company witnessed greater success with help of his innovation and technology orientation. After he returned to Apple Inc, the company returned to profitability and unveiled iMac, it developed iPad and launched iTune, it created a new digital player called iPod and finally several series of smart phones such as iPhone, iPhone 3G etc. Principles of Entrepreneurship Entrepreneurship is a creative activity of an innovator who is a visionary to effectively seize opportunities (Cunningham and Lischeron, 1991, p. 45). An entrepreneur is a manager too, because a number of managerial skills and abilities such as direction, coordination, supervision, risk bearing and control are fundamental functions of the entrepreneur (Brockhaus, 1987, p. 1). Entrepreneur is the business and hence he is more likely to be more responsible than how a manager should be. Though he is not necessarily to be a manger, he often requires functioning as a manager with his managing skills and managerial abilities to understand the organizational as well as managerial activities (Brockhaus, 1987, p. 2). One of the basic principles of entrepreneurship is innovation. Drucker (2007, p. 17) emphasized that innovation is an extremely important tool for entrepreneurs and this as a strategic tool helps them find chances, turn them to be business opportunities and seize these opportunities to make the dream in to real business entity. Irrespective of the business types or industry levels, innovation is essential criteria for business and this can take six types of product or service innovation. They are, 1) major innovation, 2) start-up innovatory business, 3) new product for presently serving market, 4) product line extension or addition, 5) improvement to existing product or service and 6) changing style (Hassanien, Dale and Clarke, 2010, p. 221). When it comes to Steve Jobs, he has been a highly successful innovator as he introduced new products such as iTune, iPod and iPad etc for the presently serving market. Kuratko and Hodgetts (2008, p. 140) described that innovation is a very specific function of entrepreneurship and that it is means by which the entrepreneur either creates new wealth-producing resources or utilizes existing resources with enhanced potential for creating new wealth. With innovation, entrepreneurs convert opportunities in to marketable solutions. Steve Jobs identified the marketing opportunity for digital music players and highly advanced smart phones. He has been very successful in designing and developing iPods and iPhones to revolutionize the technology market. Stokes, Wilson and Wilson (2010, p. 53) stressed that the essence of innovation is effectively exploiting a newer idea and the process of entrepreneurship requires both the skills to transform an existing market and to standardize a new product or service in the market. Most literatures agreed that innovation is the process by which opportunities are identified and exploited. It is down to the performance of people, individuals and teams in an organization and thus the leadership and management skills are needed to manage high levels of innovative performance (Chell, 2001, p. 225). Lowe and Marriott (2006, p. 21) identified the key elements in developing successful innovation. These key elements are: Creativity that can challenge the taken-for-granted assumptions and unsettles the status quo, The entrepreneurial capability that drives commercializing the idea, Managing the process, staff and other resources both internal and external to the firm, and Individuals’ motivation to identify and exploit the opportunities (Lowe and Marriott, 2006, p. 21). Another significant principle of entrepreneurship is risk-taking propensity of the entrepreneur. A manager is not always a risk-taker or risk-bearer as he mostly works as an employee for the entrepreneur, but entrepreneur is the owner of the enterprise and he therefore is most likely to take risks. One of the very basic needs and traits of an entrepreneur is his ability to take risks with the expectation of turning the same in to profits and opportunities. Brockhaus (1980) stressed that an entrepreneur is one who bears the risk. He is the “the organizer of an economic venture, especially one who organizes, owns, manages, and assumes the risk of a business." (p. 509). Entrepreneurs have higher risk-taking propensity than other people because of that entrepreneurship is concerned with decision-making under uncertainty. Many researchers concluded that risk-tolerant individuals are more likely to start a business and to succeed with his endeavor than risk-averse people (Baum, Frese and Baron, 2007, p. 50). Another most significant trait of the entrepreneur is his ability f creative thinking, creativity and problem solving. Creativity and creative thinking are integral part and essential components of any managerial strategy and therefore both managers and entrepreneurs need to be creative as well as thinking creatively. Treffinger, Isaksen and Stead-Dorval (2005) argued that creative thinking is an essential character of an entrepreneur starting from a single point and extending to a variety of directions by generating wide possible actions (p. 3). Entrepreneur is very likely to come across challenges, paradoxes, risks and problems, and find opportunities new connection to take one solution that may fit specific requirement (Bessant and Tidd, 2007, p. 49). The creative thinking skill of the entrepreneur needs to be used for various purposes and critical functions including problem solving, decision making, executing the plan etc. The creativity of the entrepreneur is required for him to see newer opportunities and to utilize them to his own as well as organizational benefits. To see the new opportunities is known as creativity and to use the opportunity is part of innovation (Nieuwenhuizen, 2008, p. 163). Decision making is directed towards problem solving which in turn is an important generator of decision making behavior. Entrepreneurs come across large numbers of issues and problems to be solved and they creatively bring solutions by taking right choice of action to solve the problems. Entrepreneurial Function Entrepreneurial function is the process of discovering and exploiting the opportunities for or creating a new enterprise (Ribeiro and Roig, 2007, p. 4). Boettke (2010, p. 98) argued that entrepreneurial function is about introducing novelty in to the economic system. From Schumpeter’s words, the function of an entrepreneur is to reform or revolutionize the pattern of production by exploiting an invention or an untried technology for designing and developing a new product or service. It is also about opening-up a new source of supply of materials or new outlet for products. Very specifically, acting with confidence beyond the range of familiar beacons and to manage the resistance with different aptitude is present in a small fraction of the population and that defines the entrepreneurial function (Heertje, 2006, p. 31). Entrepreneurial function is about how an entrepreneur acts within a business firm and thus how his effort impacts the economy. An entrepreneur must be an innovator, a leader, a risk-bearer and creative thinker. ‘Entrepreneurial function’ is about an entrepreneur’s functions such as innovation, leadership activities, risk-taking, creative thinking, effective decision making, problem solving and so on. Entrepreneurship is a quality that should enable people to start a new business venture or innovatively to expand the existing one. Entrepreneurs exhibit various characteristics including self-confidence, result oriented, risk-taking, leadership, originality, future oriented and innovation (Prokopenko, 1998, p. 473). All these qualities are supposed to enable the entrepreneurs to seek out business opportunities, initiate newer business project, conceptualize the same, find and gather physical, human and financial resources from most effective and profitable sources to start the business, set goals for themselves and guide the enterprise and its people to accomplish certain goals. Entrepreneurs provide driving force and influential power behind starting up small as well as big businesses based on their belief that their action and behavior determine the outcome of whatever they do. They believe that the environmental factors that may affect the business can be managed. This belief provides confidence in setting up business venture. With their vision, insight, idea and creative thinking, they find greater opportunities for new venture or to expand the existing venture or to revolutionize the products or service the venture is already marketing (Prokopenko, 1998, p. 473). This is the way they innovate in establishing a new venture or designing and developing new products or services. As mentioned earlier, an entrepreneur must be able to take-risks. No entrepreneur can successfully launch a new venture or develop new products or services by innovating unless he is ready to bear the risks and losses associated with launching it or developing them. In taking the risks, he may need to anticipate and assess the levels of risks and should be ready to face the challenges (Prokopenko, 1998, p. 473). A very successful entrepreneur must be a leader as well. As a business owner, the entrepreneur need to direct, coordinate, control and monitor people and their work. He needs to influence them to make them do what he wants them to do. As he is a leader to influence his people, he may take any of the leadership forms such as transformational, charismatic, transactional, situational or servant leaders. Originality is an important functionality of an entrepreneur. The entrepreneur, apart from being an innovator, is creative, open-minded, resourceful, versatile and knowledgeable. With his foresight, vision and perceptiveness, he functions as future-oriented with a view to benefit the economic aspects of carrying out a business venture. Steve Jobs as an outstanding Entrepreneur Steve Jobs has been declared as the greatest entrepreneur of the time by Fortune Magazine in 2012. As Heine (2012) stated, what has made Steve Jobs the greatest entrepreneur was not only due to that he changed the way people use technology, but also that he changed movies, music, retail shopping and many more. Fortune magazine has selected him the greatest entrepreneur because his entrepreneurial skills were some of the best the world has ever seen. Byrne (2012) wrote: Steve Jobs has been the quintessential entrepreneur of the new generation. He is a visionary, inspiring, brilliant and merciful man. Steve Jobs entrepreneurial skill can be traced back from the very early years of his endeavor in setting up lucrative business with his friend Wozniak. When he returned back to the US, he renewed his friendship with Wozniak who had been trying to build a small computer. It was a kind of hobby for Wozniak, but Steve Jobs identified the greatest potential and opportunity for a computer device and convinced Wozniak to go ahead with him for business. In 1975, they together started their first business and they worked towards marketing the first product Apple-I (Entrepreneur, 2012). Within two-to-three years after the development of Apple-I, they developed Apple II for marketing and the sales ballooned to $200 million. In 1980s, increased competition caused Apple’s shine starts to wear off. Steve Jobs introduced Apple Macintosh in 1984 and started revolutionizing the computer market. Due to some clashes between him and the Board of Directors of the company, he had to leave the company and launched NeXT Computer Company with a view to revolutionize research and higher education. There were some highs and lows in his business history when during his tenure with the NeXT computer company. After Apple inc declared a quarterly loss of $708 million, Apple’s CEO resigned and Steve Jobs took over as interim CEO. This turning point in Steve Jobs’ life made him become the greatest entrepreneur the time. When he returned to Apple, the company agreed to cooperate on several technology and sales fronts and he brought a number of innovation and technology including G3 Power PC microprocessor. By 1998, the company could reach to the total revenue of $5.9 billion (Entrepreneur, 2012). Within the next few years, Apple Inc witnessed a large numbers of innovations with help of latest technologies to make greater impact on the way people think about technology. Steve Jobs not only identified greater business opportunities for digital music players, smart phones and personal computers with in-built software, but also made all his ways of efforts to develop and establish their own markets. This is how he revolutionized the technology market. This was how he changed the way people lived. Steve Jobs is an extraordinary entrepreneur, because he innovated, creatively thought about developing and establishing unique markets, took risks and faced challenges of competition and other obstacles and led his people towards accomplishing the goal. He introduced a digital audio player in 2001 called iPod, an online market place called iTune in 2003, the iPhone handset in 2007, the 3G iPhone in 2009, the iPad computer in 2010 and so on (Entrepreneur, 2012). Apple is always an illuminating example for a company that thrives on innovation, product as well as brand differentiation and technology oriented company. Steve Jobs is the most successful entrepreneur since he is the brilliant brain behind Apple. Entrepreneurial challenges in Computer Industry The technology, and more specifically, the computer industry is rigorously competitive and therefore companies in the computer industry have to extensively invest on research and development to bring better advantages of latest technology and to meet customers with their preferences and requirements. The computer market is highly dynamic as customers are well aware about technology, features, different configuration, software and prices as well. When the competition is high, the market is highly dynamic and the customers are well aware about various options, it is extremely important that a company should either strategize brand differentiation or product differentiation in order to create a distinctive market and to hold a better slice of the pie. When it comes to Apple Inc and the computer industry, Apple has been facing fierce competition and the visionary Steve Jobs implemented brand as well as product differentiation strategies to stay highly competitive in the market. iMac, iPad, iPod, iTune, iLife, iPhone, 3G iPhone etc were some of the unique brands and products or services that Steve Jobs revolutionized the market by seizing opportunities for something new. Evaluative Conclusion Entrepreneurship or theoretically the entrepreneurial function is the discovery, assessment and exploitation of opportunities of new products or services or new processes or strategies or new markets for products and inputs that didn’t previously exist. Entrepreneurs find opportunities, explore in to their pragmatism and design and develop products or services to seize the opportunity. For this function, he acts as an innovator, risk-bearer, leader, manager, creative thinker, and problem solver and decision maker. This piece of paper has presented the concept of entrepreneurship and described the theoretical underpinning of its principles and entrepreneurial function with a view to analyze and study how Steve Jobs’ entrepreneurial skills and characteristics made his the greatest and extraordinary entrepreneur. 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