Entrepreneurship and Small Business Development: The case of Mark Zuckerberg - Assignment Example

Entrepreneurship and Small Business Development By Table of contents Introduction 3 Literature review 4 Proposition 6 Practical Evidence: The case of Mark Zuckerberg 7 Analysis 10 Conclusion 11 References 13 Introduction Through determination and relentless efforts, many people have risen across the business ranks to become successful entrepreneurs. Entrepreneurship involves the search for business opportunities amid risks and uncertainties with the main objective of maximizing profits. Through risk taking, entrepreneurs succeed as they take a path that most businesspersons shy away from undertaking. Although the risks involved in the process of entrepreneurship may be enormous, more often than not, those who have the courage to chart new paths of innovation and creativity normally reap the benefits that accrue (Henderson, Sutherland & Turley 2000, p. 84). Entrepreneurship skills is a very significant tool as far as the development of small businesses are concerned. Small and Medium Sized Enterprises (SMEs), start with modest capital outlays in many occasions before growing through certain attributes injected by the concerned entrepreneurship. In order for one to be a successful entrepreneur, they ought to possess at least most of certain entrepreneurship attributes namely, innovation, leadership, invention, change, and creativity. Some of the theories backing this idea include the neoclassical theory (Chakraborty 2006, p. 17). A classic example of a successful entrepreneur who started from a humble business setup is Mark Zuckerberg, who together with his partners founded the most popular social networking site, Facebook. This paper evaluates the role of entrepreneurship in the development of small business enterprises by looking at some scholarly work on entrepreneurship and SMEs after which it presents Facebook as a practical example and concludes by a final analysis of the practical example in relation to the literature reviewed. Literature review A number of scholars have presented various studies concerning entrepreneurship and its role in the starting up and developing small businesses. They all in one voice acknowledge the fact that entrepreneurs have to factor in certain entrepreneurial attributes in order for their businesses to prosper. This section critically reviews all the relevant literature concerning entrepreneurship and small business development. Malhotra (2000, p. 17) in his book categorically supports the neo-classical theory of entrepreneurship that Marshal advanced earlier in 1948. He projects the idea that there is nothing like exploiting particular opportunities in the face of risks and uncertainties, as he strongly believes that everybody is in business due to the profits that they make. According to him, this theory means that every entrepreneur reaps profits in accordance to their efforts and that specialization plays a key role in business prosperity in that more seasoned entrepreneurs were bound to experience entrepreneurial success as compared to their novice counterparts. While some scholars subscribe to this school of thought, Kapila and Mead (2002, p. 34) proposes the innovative theory that Schumpeter advanced in the year 1991. In this scenario, he openly disagrees with the neo-classical theory by proposing that creativity and innovation plays an important role in any entrepreneurial undertaking, as it was very rare to come across an unknowledgeable successful leader. He follows closely the theory by emphasizing on the significance of creativity in innovation whether in the products, the manufacturing processes, or the services. According to him, innovation enables entrepreneurs to stay ahead of the competition especially for the small and medium scale businesses. Likewise, Wang Yao and Hsu (2012, p. 24) mentions the essence of innovation to contemporary entrepreneurs considering the fact that the world has become a global village through various technological advancements. He claims that entrepreneurs can tap into massive opportunities that exist in current markets by simply coming up with innovative methods in processing the products and delivering the services. Although not all entrepreneurs can make good leaders, Charantimath (2006, p.48) advocates for the enhancement of communication within any business setup in order to have effective leadership, a key aspect in managing successful business enterprises. Since the market shares of a given business enterprise anchor heavily on the leadership style that the management decides to adopt, Charantimath (2006, p.49) advocates for rational leadership in that leaders ought to act prudently to their followers in order to win confidence of all the stakeholders. This trust created will boost the business sales and profits, more so if the enterprise is at its incipient stages. While Sonfield (2000, p. 21) agrees that leadership is pivotal in entrepreneurial success, he adds that this goes hand in hand with motivation in order to formulate attainable business goals and objectives. In this attribute, he identified such factors as the entrepreneur’s competence, market opportunities, and the urge to increase the profit margin as some of the key elements that have motivational aspects in an entrepreneur. In his studies, Sonfield (2000, p. 22) argues that there has to be an inward motivation from the prospective entrepreneur in order to scale the heights of a competitive market. In furtherance of the innovation principle, Lilley, Grodzinsky and Gumbu (2012, p. 82) explain that change and invention can help redefine the model by which a business is operating. They go on to state that most entrepreneurs who prosper in a highly competitive market normally embrace change and invention in order to stay afloat in the market and to penetrate the market further hence transcending their initial goals and objectives. Although Marco, Lidewey Van and Jansen (2005, p. 97) support the need for continual change and innovation in entrepreneurship, they insist that before entrepreneurs adopt change and inventions, they ought to assess whether the desired change will suit the market interests and preferences. According to them, not every market opportunity warrants an invention in the products or service offered. Therefore, before entrepreneurs venture into any form of business by means of inventions, they ought to consider whether theirs is a calculated risk or the suitability of their inventions to the prevailing market trends. Proposition From the literature reviewed above, it is evident that entrepreneurship is a challenging undertaking where one must venture into business, the enormous risks, and uncertainties notwithstanding. It is prudent for an entrepreneur to consider certain factors before choosing any viable business idea. First, they ought to understand fully the prevailing market conditions for the products or services that they propose to offer. This is to give them enough insight so that they do not plunge their hard-earned capital into an unviable business venture (Malhotra 2000, p. 17) Although any given individual can choose to venture into any business of their choice, there are key attributes of entrepreneurship that they ought to embrace in order to succeed in a turbulent business environment. The first and foremost aspect is motivation as no entrepreneur can succeed without drawing inspiration from certain sources. Motivation is the driving force that inspires an entrepreneur to venture into a risky business environment full of economic uncertainties with the sole reason of making profits and not losses. In addition, invention and innovation plays a key role in attracting and retaining customers especially in the dynamic online business. Through inventions and innovations, creative entrepreneurs have always managed to stay afloat and gain competitive advantage in a market full of heightened competition (Chakraborty 2006, p. 19). Therefore, before an entrepreneur starts up or develops a small business, they ought to take consideration of their leadership capabilities, motivation factors, innovative skills, and creative skills. In as far as the development of small business through entrepreneurship is concerned, entrepreneurs should be able to see the opportunity that lies behind every problem and exploit the business opportunity to their maximum ability. This will enable them have a competitive edge over their rivals thereby commanding a larger market especially in internet business that so many small and medium entrepreneurs infest (Chakraborty 2006, p. 20). Practical Evidence: The case of Mark Zuckerberg Born on 14th May 1984, Mark Elliot Zuckerberg is undoubtedly one of the youngest self-made billionaires that the world has seen. With a net worth of US$13.3 billion as at June 2013, Zuckerberg has proved to be an ideal entrepreneur especially in the cyber world that is infested with several tycoons. Coming from a modest family, Zuckerberg confesses that he had been having the burning dream of becoming a successful and renowned entrepreneur from an early age considering his innovative nature since childhood. Although his interest was more on the internet, entrepreneurship came as an incentive to his leadership, innovative, and motivation skills. Growing up in California, his obsession for computer software and internet was always raging as technological advancements continued to take place. It was at Harvard that Zuckerberg discovered and unleashed the full potential of his computer skills. Zuckerberg together with his friends utilized their innovative skills to create an interesting social networking site with unique features and capabilities. Although by taking this kind of business route, they fully understood the risks and uncertainties involved such as cyber-attacks and internet abuse, Zuckerberg and other cofounders of Facebook assured themselves of success because they had taken a calculated risk (Lilley, Grodzinsky & Gumbu 2012, p. 82) While at Harvard, Mark Zuckerberg collaborated with his friends to launch Facebook in 2004. Although at the incipient stages Facebook only targeted Harvard students who could access the social networking site to update and inform each other on the current trends, Facebook usage triggered a growing interest from all quarters of the cyber space. This market gap motivated Mark Zuckerberg to innovate Facebook to cater for the outside world by expanding the capacity of his company. This saw tremendous growth in the number of Facebook users with approximately half a million active users by 2006. The passion for entrepreneurial success motivated Zuckerberg to the extent that he decided to make his company public by listing it in the stock exchange market (Brandon 2013). Currently, Zuckerberg is an internet entrepreneur and computer programmer by profession, having dropped out of Harvard University to pursue his entrepreneurial dreams as the Facebook CEO. Him together with other cofounders, have managed to sail across the unpredictable economic weather to become some of the most successful internet entrepreneurs of our time. As the chair and CEO of Facebook Inc., Zuckerberg has amassed a personal wealth projected to be over US$13.3 billion, having tremendously risen across the entrepreneurial ranks within a short time. The very interesting fact about Zuckerberg is that him together with Dustin Moskovitz, Chris Hughes, Eduardo Saverin, and Andrew McCollum unveiled Facebook from their university dormitory, as they did not have a physical office at the time of the conception and implementation of the business idea. Due to continued interest by various organizations and the growing number of users, Zuckerberg rose to fame in the world of entrepreneurship, becoming a billionaire at the age of 23 by the year 2007. However, this did not stop him from advancing and expanding the company beyond its expected limits as according to him, he had just realized that there for no limits for him in the world of entrepreneurship (Brandon 2013). Although several organizations at various occasions approached Zuckerberg with the intention of buying his company, Zuckerberg rejected all their offers citing underestimation of the company’s value on the side of the ‘big boys’. Some of the largest internet companies that approached him include Yahoo, Google, and Viacom. These companies did not succeed in their quest to acquire Facebook, as they were not willing to part with the USD$ 2 billion that Zuckerberg was asking. Perhaps just to testify of the company’s market command and influence in the society, by the end of 2012, viable statistics indicate that the total number of Facebook users hit the 1 billion mark due to the wide varieties of services offered by Facebook. Although Facebook is a primarily social networking site, its dominance and marketability has attracted a broad spectrum of users and stakeholders with some investment companies using the platform primarily for their advertisements. The mainstream media have not been left behind, as they too realized that within the Facebook platform, virtually everyone was a potential journalist and so their interest in this unique rival triggered their adoption of Facebook. Renowned international media like BBC, CNN, Al Jazeera, and CCTV have all embraced active interaction with their customers via Facebook (Brandon 2013). Facebook allows users to share a number of elements through its interactive features. The services offered by Facebook include the posting of updates and newsfeed on one’s timeline, sharing of photos, video clips, and documents. Besides, both corporates and individuals can market themselves and advertise their products on the Facebook platform, a marketing strategy that many organizations have adopted in the recent past. Due to Zuckerberg’s creativity in ensuring customer satisfaction, he has attracted unrivalled interest in a number of companies with some using Facebook s their sole online customer care platform. This is because the easiest way to reach a wide number of customers is through the social networking site due to the active Facebook use by many people across the globe. Since listing Facebook in the stock market, Zuckerberg has seen Facebook stock prices fluctuate with the lowest being USD$ 20 that occurred in 2012. Overall, the company has grown from strength to strength to be the leading social networking site in the world as enlisted in the Forbes Magazine (Brandon 2013). Analysis In this section, the analysis of the literature reviewed in relation to the practical example will give the full insight into entrepreneurship and small business development. With reference to literature reviewed above it is apparent that entrepreneurs can start up a business enterprise even with inadequate resources and work the business up the economic ladder to become some of the most successful businesspersons in the world (Jung-Wan & Tai 2010, p. 65). Facebook Zuckerberg’s case presents a perfect example of an entrepreneur who started from a relatively humble beginning but through passion and sufficient motivation, he pressed on even without proper office for his company. His main motivation came from the urge to enhance communication between the Harvard students. He did not that this creative idea would come to be the world’s most interesting ideas upon full launching and adoption. Therefore, motivation together with invention played a key role in Zuckerberg’s entrepreneurial trajectory as he discovered new ways of communication and sharing ideas through his creative skills. This means that through creativity and innovation, he managed to penetrate and influence an already flooded internet market, making things to work for his advantage. By launching Facebook, he had plans to take internet communication to the next level where people could socialize and interact with corporates within the same internet platform (Malhotra 2000, p. 17) Although during his campus years, Zuckerberg rarely held any leadership position, he proved to possess exceptional leadership skills as far as steering Facebook to become a giant internet company is concerned. Through constant improvement on his leadership style, the famous Facebook CEO has seen the company stay ahead of the competition since its inception. This, he does by constantly engaging his team of innovative programmers and software engineers to come up with new products and services. When it comes to invention and change Zuckerberg played a significant role in revolutionizing communication through the social networking sites. He invented Facebook, a unique social networking site with distinct and unique features that saw people embrace change to adopt the new internet technology. Change through invention is a crucial aspect in any business setting as consumer interests and preferences fluctuate depending on the prevailing market conditions. The CEO of Facebook Inc. perfected this art by further allowing Facebook to go public so that it could be listed in the stock exchange market. While many internet companies were reluctant to include the social networking aspect in their services, Zuckerberg moved swiftly to give the social media a new dimension as even the mainstream media have adopted Facebook for interacting with their customers. This is the king of change and visionary mindset that aspiring entrepreneurs ought to incorporate in their quest to set up businesses especially when developing small enterprises (Dutt and Ros 2008, p. 36) Conclusion Since the setting up and developing of small businesses demands some level of entrepreneurial skills, it is always advisable for prospective entrepreneurs to evaluate the viability of their proposed business before they venture. Entrepreneurship involves the search and exploitation of market opportunities and it is only through creativity that entrepreneurs can visualize potential gaps in the market to change them into profit making opportunities. Although a myriad of opportunities may present themselves, entrepreneurs ought to exercise caution in taking calculated risks especially when venturing into internet business that a lot of dynamism. Among the key attributes that successful entrepreneur possess are innovativeness, invention, creativity, leadership, and change. Despite possessing all these qualities, potential entrepreneurs ought to appreciate fully the fact that entrepreneurship involves risks and uncertainties and the higher the quantity of the two the higher the profits accrued. References Malhotra, Y 2000, Knowledge management, and business model innovation, Hershey, Idea Group Publishing. Dutt, A, & Ros, J 2008, International handbook of development economics, Cheltenham, UK, Edward Elgar. Charantimath, P M 2006, Entrepreneurship development and small business enterprises, New Delhi, Pearson Education. Kapila, S, & Mead, D C 2002, Building businesses with small producers successful business development services in Africa, Asia and Latin America, Ottawa, Ont, International Development Research Centre. Chakraborty, K S 2006, Entrepreneurship and small business development: with special reference to Tripura, New Delhi, Mittal Publications. Lilley, S, Grodzinsky, F S, and Gumbus, A 2012, ‘Revealing the commercialized and compliant Facebook user’, Journal of Information, Communication & Ethics in Society, 10(2), pp. 82-92. Sonfield, M C, 2000, ‘Establishing And Developing Entrepreneurship and Small Business Growth in A Post-Communist Economy: The Case of Hungary’, International Journal of Entrepreneurship, 4, Pp. 17-27. Jung-Wan, L, & Tai, S W 2010, ‘Motivators and inhibitors of entrepreneurship and small business development in Kazakhstan’, World Journal of Entrepreneurship, Management and Sustainable Development, 6(1), 61-75. doi:http://dx.doi.org/10.1108/20425961201000006 Henderson, R, Sutherland, J, & Turley, S 2000, ‘Management development in small business: A sub-regional examination of practice, expectation, and experience’, Regional Studies, 34(1), pp. 81-86. Marco, V G, Lidewey Van, D S & Jansen, P 2005 ‘Learning Opportunities and Learning Behaviours of Small Business Starters: Relations with Goal Achievement, Skill Development and Satisfaction’, Small Business Economics, 25(1), pp. 97. Brandon, G 2013, 10 fun facts about Facebooks Mark Zuckerberg, CNN, Retrieved 4 July 2013 Read More