New Venture Creation: University of Nottingham - Coursework Example

Topic: Individual Business Report - New Venture Creation Affiliation: IntroductionGlobal trends in business undertakings have necessitated the need for creativity and innovativeness in businesses, in a bid to survive the competitive local and international environments. Entrepreneurship has taken a significant position in this pursuit. It has exploited emerging business opportunities, creating employment and boosting economic welfare at individual and national levels. The SimVenture Creation is a typical entrepreneurial undertaking that engaged the establishment of an entrepreneurial venture. The creation was undertaken by employing a team effort for three years. Business and economic decisions were made throughout this period, with a successful financial position being achieved. By the end of the three years, the SimVenture Creation had accumulated a total profit of £20191. The venture was making a sale of up to 60 units every month. The closing year therefore depicted a strong business portfolio for the venture. Financial Achievements The simulation started with a default start-up capital of £10,000. Over the next three years, the running of the venture was to be done by all team members, and annual results filled at the end of every year. This process engaged numerous activities that when combined would determine the financial position of the SimVenture Creation. The underlying interest was to take advantage and exploit emerging business opportunities, while accounting for the welfare of the firm. The entrepreneurial position of the venture was highly dependent on the decisions made by the team members. All the members embraced the fact that a successful financial position is dependent on the firm’s culture. The behaviours, values, cognitive and organizational processes (Barringer & Ireland, 2008) applicable to all team members laid the foundation for the establishment of the right business climate. In other words, these values set up an entrepreneurial team, whose main interest was financial success at the close of business, after the three years. The first year was characterized by high investment activity, with expenses outperforming income. This period basically shaped the entrepreneurial aspects of the venture, with high expenditure and business shaping being made. By the end of the second year, the venture had been fully operationalized. In the same period, financial stability had been realized as income levels surpassed business expenditures. In the final year of simulation, entrepreneurial opportunities had been fully exploited. Legal, social and economic factors in the operational environment had been accounted for in the two previous financial periods. Year one and two had fully integrated market research to determine the market loops that the venture sought to account for. Business-customer interaction had been enhanced in the process, aided by the strong relationship that the venture realized with its suppliers, advertisers, business contractors and creditors. Production and sales performance was matched with the outcome of market research undertaken by the entrepreneurial team. As a result, sales increased, subcontracting was alleviated, customers accessed sales on credit and operational costs were significantly cut. Cost cut was realized through reduced hours of work and the fact that optimal experiments had been done. Cash flows remained dynamic, with debtors, creditors, sales, revenues and expenses being fully accounted for. Sales had hit highs of 60 units for a month and a profit of £20191 was recorded by the close of business at the end of the third year. Key Decisions Made Management decisions The management is a critical functional organ of the SimVenture Creation. Since the running of the venture was undertaken by an entrepreneurial team, each team member was charged with a decision making responsibility that was subject to the approval of the team. The functional areas of the venture were the primary basis upon which key decisions were made. Management decisions in the firm encompassed outlining a clear leadership strategy, building a consensus within the team, creating effective and efficient communication procedures, encouraging creativity and innovativeness in the firm, building trust in the team and deciding on development measures suitable for the venture (Kirby, 2003). These decisions were primarily tailored towards the realization of a successful entrepreneurial venture. Financial decisions Decisions under this aspect were basically on allocation of available resources. The outcome of financial decisions was to place the venture at a profitable decision, by balancing all business undertakings in the firm. These decisions were mainly rooted in costs and benefits of setting up the SimVenture Creation. Operations had to be financed and earnings were essential to realize. In this pursuit, sources of finance at different levels of business operations are critical to evaluate. The venture started with a virtual capital of £10,000. However, decisions to financial success encompassed financial decisions that pertained to retaining earnings, obtaining supplies on credit, incurring financial debts and considering venture capitalists sources. In the venture, earnings were retained to finance strategic plans. Where possible, costs of operations were minimized to finance inevitable expenses in the business undertakings. Operational decisions The business environment is competitive, and therefore the venture needed to keep at par with the market and industry trends. Operational decisions were to primarily explore the competitive advantages of the firm, and further lay down strategies of making this advantage sustainable over time. Creativity and innovativeness are determined as crucial factors that differentiate competing entrepreneurial firms. For the SimVenture Creation case, the Porter’s five forces and Porter’s Diamond model (Allen, 2012) were determined as crucial competitive strategies’ components for the firm. Based on the two, the operational decisions arrived at and approved by the team were tailored towards placing the venture a step ahead, prior to rival firms. Specifically, the operational decisions evaluated the entrepreneurial orientation of the firm and management of resources and innovation at all levels, to define the competitive advantages of the venture based on the diamond model. Marketing decisions Marketing was an on-going activity in all processes that the firm engaged into. Basically, this aspect of decision making encompassed creating customer awareness in regard to the venture’s products. The underlying interest was to accustom the customers to the firm’s products, by seeking to satisfy consumer demand in terms quality, quantity, tastes and preferences. Market research and product experimentation was undertaken in a bid to realize market inadequacies that needed to be accounted for. Advertising was determined as a major marketing tool, focusing on customers, competitors and the company itself. Marketing was to identify the target audience and then employ the following process: research, inform, promote, persuade and remind (Allen, 2012), in the pursuit of achieving the marketing objectives. Human resource decisions All the above mentioned business activities could not be realized in the absence of human capital. This is a necessary factor in the operational context of the firm, covering management and leadership, production, marketing, sales and accounting (Stutely, 2007). It was the heart of the organization, monitoring and controlling business activities to enhance the realization of organizational goals and objectives. Human resource decisions covered assigning of duties and responsibilities to each team member, outlining knowledge and skills that match each level of business operation and determining the optimal hours of work, prior to the desired entrepreneurial results. Learning from the Simulated Venture The SimVenture Creation is an eye opener to the wider scope of entrepreneurship in the real world scenario. Running the firm for three years has proven to be an interesting activity. Markets are competitive, and the survival of the firm was based on the decisions made at all levels of operation. Working as a team has accounted for a beneficial business aspect; success. The potentials and abilities of each team player were combined in the formation of an entrepreneurial team. Driven by creativity and innovativeness, the team employed diversity of its member knowledge and skills to work together towards a common goal. This comes with a special lesson, that specialization and division of labour in a group effort is a critical entrepreneurial aspect that determines team-based entrepreneurial success. If the simulation was to be done all over again, there are a number of aspects that would need to be done differently. The first thing that would to be changed is the way the firm dealt with its debtors. After the three years, the firm’s debtors had not cleared their balances. This scenario would need to be addressed due to the effects transferred to the financial statements. Strict grounds of having debtors to pay their balances would need to be accounted for. Secondly, market research was stopped at some point. However, markets are dynamic in nature, and the firm should keep track of this dynamism through continued research in the market. Thirdly, instead of maintaining sales a constant level in November the third year, the firm would aim to have sales rising over the years for business welfare purposes. Creditors would also need to be paid in due time without delays in order to foster a long lasting relationship and enhance consistency in obtaining supplies on credit. Critical Review The interest of the simulation was to operationalize the functioning of the SimVenture Creation. Decisions made by the team depicted diversity and dynamism in entrepreneurial undertakings. Subject to the approval of the team as a whole, individual decisions of each player were upheld and contributed significantly to the success of the venture. I believe entrepreneurial opportunities are cannot be exhausted because it only takes a unique idea to set up an entrepreneurial venture. Team effort is also crucial in aiding an all-round success in business due to the convergence of multiple skills and knowledge. Conclusion Global business trends are promising and there still exists numerous market loops that are unaccounted for. Entrepreneurship is a significant business context that can quickly exploit emerging opportunities at all levels of the world economy. The SimVenture Creation was a success, marking the simple yet sophisticated operationalization of an entrepreneurial venture. The financial position of the venture at the close of business shows that the payback period of an entrepreneurial firm is favourable, prior to making the right business decisions at all levels. References Allen, R, (2012), New Venture Creation, International Edition (6th Edition). South Western Cengage Learning. Barringer, B, & Ireland, D, (2008), Entrepreneurship: Successfully Launching New Ventures, 2nd Ed, Prentice Hall (Ch. 10). Kirby, D, (2003), Entrepreneurship, London, Aldershot: Gower. Stutely, R, (2007), The Definitive Business Plan, New York: Prentice-Hall. Read More