Difference between Intrapreneurship and Entrepreneurship to Exporting - Essay Example

Essay on intrapreneurship (Corporate Entrepreneurship) and entrepreneurship Objective Using the essay format please discuss whether you think following statement is true or false: "There are different between Intrapreneurship and entrepreneurship to exporting" The statement is absolutely true why because, entrepreneurship is the process of starting a new venture or an organization etc. but intreprenuership is something belongs to the corporate culture which envisages in the release/production of a new product or so. Let’s have a look on the following sections. Introduction Synthesis of the concept - Entrepreneurship In an enterprise, land, labor and capital are separately owned respectively by landowners, laborers and financiers. It is the entrepreneur's organizing ability which brings then together in proper proportion & at reasonable rates to work them in production so as to yield the best returns. As an organizer, he guarantees the specific sum of landowners, laborers and financiers in return for assignments made to them. Thus the entrepreneurs are subject to large element of risk. He starts the enterprise, organizes it, supervises it and engineers long run plans of the enterprise. He is the talented and motivated person who sees and visualizes opportunities for introducing the new production technique and product, form of organization, discovery of new market and new source of supply of raw materials etc. That is how, he innovates. Thus innovation, or say, a new combination of factors of production, also involves the elements of risk and uncertainty which Schumpeter, however, did not spell out explicitly in his concept of innovative entrepreneurs. (Entrepreneurship and Small Business Management Authors: Michael Schaper & Thierry Volery 2nd Revised Edition) In short, the concept of entrepreneur is intimately associated with three elements - risk bearing, organizing and innovating. Factors influencing entrepreneurship Entrepreneurship can develop only if the infrastructural and other facilities are provided. Peter Heydeman (USA) has identified the following factors as the factors influencing entrepreneurship and aptly called them as, incubators". They are the following. (i) Space for conducting a retail of small manufacturing business (ii) availability of machinery and finance at low cost/subsidy (iii) facilities of establishment, i.e., secretarial assistance (iv) Storage and marketing facilities (v) export facilities and export guidance (vi) Motivation from the part of the government and other agencies. The role of entrepreneurship in Economic Development Economic development basically means a process of upward change where by the real per capita income of a country increases over a long period of time. Thus, naturally a question arises. What causes economic development? This question has invited the attention of scholars of socio-economic change for years. However, for the time being let us discuss what is the significance of entrepreneurship for economic development. Adam Smith (1776), the foremost classical economist assigned no role for entrepreneurial role in economic development. Smith treated the role of capital formation as an important determinant of economic development. In his theory of economic development, David Ricardo identified only three factors of production, namely, machinery, capital and labor. According to Ricardo, profit leads to saving of wealth which ultimately goes to capital formation. Thus in both the classical theories of economic development, there is no room for entrepreneurship. The economic history of the presently developed countries, viz. USA, Russia and Japan tends to support the fact that the economy is an effect for which entrepreneurship is the cause. The crucial role displayed by the entrepreneurs in the development of the western countries has made the people of the under developed countries conscious of the significance of entrepreneurship for economic development. Now, people have begun to realize that for achieving the goal of economic development, it is necessary to increase entrepreneurship both qualitatively and quantitatively. (Stevenson, H.H. and Jarillo, J.C. (1990) ‘A paradigm of entrepreneurship: entrepreneurial management’, Strategic Management Journal, Vol. 11, special issue, pp.17–27) The role of entrepreneurship in economic development varies from economy to economy depending upon its material resources, industrial climate and the responsiveness of the political system to the entrepreneurial function. The entrepreneurs contribute more in economies with relatively more favorable opportunity conditions than in the economics with relatively less favorable opportunity conditions. ENTREPRENEURIAL SPIRIT AND BEHAVIOURAL COMPETENCE Every year thousands of new businesses are created. Creating a new venture is exciting, challenging, frustrating and rewarding. New ventures are created by entrepreneurs who have characteristics and traits that distinguish them from others. Most entrepreneurs are innovative, willing to take moderate risk, self confident, hard working and quite healthy. The knowledge of entrepreneurial competencies has been sharpened over three decades based on empirical research. Earlier, there used to be a firm belief that persons with business family background could become successful entrepreneurs. Subsequently there was a belief that individuals need technical know how, as a major requirement for being successful in launching an industrial venture. Scholars have examined this question at length and come to some conclusions. Following is a list major competencies that contribute towards top performance: Innovative: Entrepreneurs are more innovative and creative than the average person. Innovative ability may be defined as the unique ability to 'foresee products, services, or new operating techniques that others miss. In other words it is a process of systematic development and practical application of new idea. Initiative: An entrepreneur takes action that go beyond job requirements or the demand of the situation. Initiative is the ability to do things before being asked or forced by the events. Tolerance to ambiguities: The extent to which conflicts and ambiguities can be tolerated by the entrepreneur is one of the factors influencing the behavioral competencies of entrepreneur. Aggressive: Most entrepreneurs are aggressive in their dealing with other people. They know what they went to accomplish, and they are able to overcome obstacles. Assertiveness: This is another trait, which majority of entrepreneurs possesses. Assertiveness simply means the ability to confront problems and issues directly with others. Self Confident: Most entrepreneurs express confidence in their own ability to complete a task or meet a challenge. They prefer to stick with own judgment in the face or opposition or early lack of success. Problem solving: Different problems arise in a Enterprise business .Problem solving is an area where entrepreneur identifies new and unique ideas to reach the organization goals. Here, one can switches to an alternative strategy or generate new ideas for innovative solutions. Persistence: It is the ability to take repeated action to overcome obstacle that get in the way of reaching goals. Sees and Acts on Opportunities: As an entrepreneur one should look forward and take action on opportunities. Willing to work long hours: Entrepreneurs are usually considered work alcoholics. They cannot stick to a 'nine to five' work schedule. Concern for high quality of work: A true entrepreneur believes in high quality of works. Hence, he always tries to do things that meet or beat existing standards of excellence. Information seeking: It is the ability to collect analysis and interpret information to clarify problems or help to attain organizational goals. Systematic planning: By systematic planning we mean logical, step by step plans to reach organizations goals. Entrepreneur takes logical and systematic approach to planning activities. Efficiency orientation: It is the ability to find ways to do things faster or with fewer resources or at a lower cost. Persuasive: Through persuasion one can successfully convinces others - buy a product or service - provide financing - assert strong confidence in own companies or organizations products or services. Monitoring: Develop a system for personal supervision of all aspects of a project. Highly competitive: Entrepreneurs believe in Win - lose situations, and they expect to win. Use of influence strategies: Entrepreneurs uses a variety of strategies to affect others. For example, they can use influential people as agents to accomplish own objectives Concern for Employee Welfare: A true Entrepreneur is always concerned with employee welfare. He takes action to improve welfare of employees. All the competencies described above are instrumental in making a person successful entrepreneur. Through these competencies we can discriminate between successful entrepreneurs and average ones. All these competencies are inter-related and could be developed through training. Entrepreneurial value Values are important to the study of entrepreneurial behavior because they lay the foundation for understanding the attitudes, motivation as well as perceptions of individual entrepreneurs.Entrepreneurs enter business with pre conceived nations of what 'ought' and what 'ought not' to be done. Of course these nations are not value free. On the contrary, they contain interpretations of right and wrong. Further they imply that certain behaviors or outcomes are preferred over others. As a result values have objectivity and rationality. Values generally influence attitude and behavior. Say for example, suppose an entrepreneur is having the view that allocating pay on the basis of performances is right, whereas allocating pay on the basis seniority is wrong or inferior will frame the wage policy accordingly in his business. Thus value orientation will have an impact on the altitude as well as behavior of an entrepreneur. Altitude and values: Attitude reflect how one feels about something. Attitudes are Evaluative statements concerning objects, people or events. Say for Example, when I say I like my job’ I am expressing my attitude about my work. Attitudes are not the same as values. Values are the broader concept. Attitudes are more specific than values. Values also contain a moral flavor of Tightness or desirability. The statement that 'discrimination is bad' reflects one's values. "I favor an action programme to recruit women for managerial positions" is an attitude. Attitudes, like values are acquired from parents, teachers and group members. In organizations attitudes are important because they affect job behavior. Types of Entrepreneurial Attitudes: A person can have thousands of attitudes, but Entrepreneurial Attitudes focuses our attention on a very limited number of job related attitudes. These job related attitude will have a favorable or unfavorable impact depending upon the work environment. Some of them are: (1)Job satisfaction: Individuals general attitude towards his or her job (2)Job involvement: The degree to which a person identifies with his or her job and considers his or her performance important to his or her sense of self-worth. (3)Enterprise commitment: An entrepreneur commitment towards the enterprise in terms of loyalty, identification and involvement. Values and attitudes influence on the behavior of the entrepreneur. A favorable attitude and value orientation helps the entrepreneur to develop the following behavioral competencies. (i) Use imagination/intuition (ii) Bike moderate risk (iii) Enjoy freedom of Expression & Action (iv) Look for economic opportunities (v) Find satisfaction from successful completion of tasks (vi) Take initiative (vii) Analyze situation and plan action (viii) Involve in work actively Entrepreneurs and Ethics: Ethics means the study of moral obligation involving the distinction between right and wrong. Throughout the new venture process, entrepreneurs make hundreds of decisions. They enter into contracts, select suppliers, hire employees and make numerous other decisions. At times entrepreneurs might be tempted to overlook ethics in their dealings with others. Unethical activities may provide a short-time benefit, however, in the long run; ethical entrepreneurs are the ones who will be successful. To provide ethical guidance for all employees, entrepreneurs should develop a code of ethics that eliminate unethical practices, clarifies companies’ ethics policy and inform employees of disciplinary action resulting from unethical behavior. Entrepreneurial creativity: Demands for creativity and innovation make the practice of Entrepreneur endlessly exciting. Nearly all entrepreneurial problem solving requires a healthy measure of creativity. Creative problem solving: In the context of management problem solving is the conscious process of bringing the actual solution closer to the desired situation. The creative problem solving consists of four steps: Identifying the problem (2) generating alternative solutions (3) selecting a solution and (4) implementing and evaluating the solution. Inadequate problem solving is common among new venture business. By seeing problems, as gaps between an actual situation and a desired situation, managers are in a better position to create more effective and efficient solutions. Depending on the solution problems can be resolved, solved, or dissolved. It is important to remember that today's solutions often become tomorrow's problems. Intrapreneurship (Corporate Entrepreneurship) Project Design and network analysis The execution of Intrapreneurship project follows a definite path of planning scheduling and controlling. Networks techniques help the management of an organization in performing these functions efficiently and effectively. Project design and net work analysis are concerned with the development of the Intrapreneurship project work plan and the time duration. The strategy selected as a result of the techno-economic analysis forms the starting point of the project design development. Intrapreneurship Project design is the frame work of a project formulated with detailed sequences. Project design helps the entrepreneur to implement the project as scheduled. The strategy is examined in detail and the details are utilized to compile the sequential narration of the constituent activities of the project. This compilation of the sequential narration is known as the project logic. When it is represented in the form of a graphical pattern, it is known as a net work. A net work comprises a set of symbols connected with each other in a sequential relationship with each step till the completion of a project. PROJECT APPRAISAL Having formulated the project, it is appraised for its technical soundness such as size and location, design of works, scheduling of construction and operation, identification of constraints etc. The commercial aspects are appraised for arrangements and procedures for procurement of necessary goods and services for the construction and operation phases of the project. On the procurement of inputs, it is necessary to ascertain the reliability of the sources of supply, the quality of inputs required, prices etc. On the output side, a recheck is made of the data, parameters and variables used in demand projection and also to assess the validity of the price estimates. The Intrapreneurs’ organizational and management review concentrates on the adequacy and competence of the organization and management responsible for the construction and operation of the project. It examines the legal status of the project authority, its powers, direction and management, finance, staffing and its relationship with other bodies. The financial review covers two major aspects. First is the reliability of project cost estimate their composition it terms of local and foreign currency, the phasing of capital and current expenditures, the source of funds and terms etc. the second aspect covers a thorough review of the financial viability of the project from the beneficiary's and project authority's, the financing agency's, the government's point of view. Finally the Intrapreneurs’ project is examined in terms of its economic justification in the list of development priorities. The evaluation of the development priorities of the sector in which the project fells including an examination of the relative scarcity of resources to be employed by the project are done. Special emphasis is placed on the criteria for measuring the economic (on social) costs, economic (or social) benefits, including validity of the values of parameters used in measuring social costs and benefits. Profitability Appraisal Profit planning and budgeting are virtually important to assess the operational efficiency of a project and its profitability. Factors affecting profit Volume of fluctuations. The volume of sales plays an important role in profit making. Performance changes: There is a direct relationship between performance and volume of profit A change in variable costs will bring changes both in break even point and the marginal profit. A change in selling price will bring changes in the break – even point. Composition of products: The changes in the composition of products will bring changes in the levels of profit. Steps in the preparation of a profit plan (1) Preparation of sales budget: It represents the revenue side of the profit plan (2) Preparation of production budget: It shows the number of units of each product which is to be manufactured. (3) Preparation of Direct materials budget: Direct materials budget deals with the number of units of each kind of raw material. 4) Preparation of Purchase budget: Purchase budget determined the number of units to be purchased and the timing of the purchase 5) Direct labor budget: Direct labor budget is prepared on the basis of standard labor hours and average wage rates. (Davis, S.K., (1999) Decision criteria in the evaluation of potential intrapreneurs. Journal of Engineering Technology Management 16, 295-327) Decision Making Process of an Intrapreneur (Corporate Entrepreneur) The life of the manager is filled with making decision after decisions. Decision making is a managerial activity in the sense that it is a fundamental responsibility of the manager. It has to be done in connection With formulating plans, establishing objectives, laying down policies and so on. Decision making can be defined as the selection based on some criteria of more behavior alternative from two or more possible alternatives. Decision making involves two or more alternatives because if there is only one alternative there is ho decision to be made. A decision essentially involves choosing a particular course of action, after considering the possible alternatives. The chosen course of action may consist in deciding either to proceed on a particular line or what must not be done in a given situation. It may be expressed in words in the form of policies, rules, orders, instructions and the like. Conclusion The role of entrepreneurship in economic development varies from economy to economy depending upon its material resources, industrial climate and the responsiveness of the political system to the entrepreneurial function. The entrepreneurs contribute more in economies with relatively more favorable opportunity conditions than in the economics with relatively less favorable opportunity conditions. Thus by analyzing all these points, it can be obviously stated that there is difference between Intrapreneurship and entrepreneurship to exporting. References 1. Entrepreneurship and Small Business Management Authors: Michael Schaper & Thierry Volery 2nd Revised Edition. 2. Morris, M.H. and Kuratko, D.F. (2002) Corporate Entrepreneurship, Harcourt College Publishers, Orlando, Florida. 3. Latour, B. (1999) Pandora’s Hope, Essays on the Reality of Science Studies, Harvard University Press, Cambridge, MA. 4. Guth, W.D. and Ginsberg, A. (1990) ‘Guest editors introduction: corporate entrepreneurship’, Strategic Management Journal, Vol. 11, pp.5–15. 5. McGrath, R.G., MacMillan, I.C. and Venkatraman, S. (1995) ‘Global dimensions of new competencies’, in Birley, S. and MacMillan, I.C. (Eds.): International Entrepreneurship, Routledge, New York. 6. Stevenson, H.H. and Jarillo, J.C. (1990) ‘A paradigm of entrepreneurship: entrepreneurial management’, Strategic Management Journal, Vol. 11, special issue, pp.17–27. 7. Peterson, R. and Berger, D. (1972) ‘Entrepreneurship in organizations’, Administrative Science Quarterly, Vol. 16, pp.97–106. 8. Schollhammer, H. (1982) ‘Internal corporate entrepreneurship’, in Kent, C., Sexton, D. and Vesper, K. (Eds.): Encyclopedia Entrepreneurship, Prentice-Hall Inc, Engelwood Cliffs, NJ. 9. Brunaker, S., Kurvinen, J., (2005) Intrapreneurship, local initiatives in organizational change processes. Leadership and Organization Development Journal, 27(2), 118-132. 10. Davis, S.K., (1999) Decision criteria in the evaluation of potential intrapreneurs. Journal of Engineering Technology Management. 16, 295-327. 11. Menzel, H.C., Aaltio, I., Ulijin, J.M., (2007) On the way to creativity: Engineers as intrapreneurs in organizations. Technovation. Article in press. 12. Pinchot, G., Pellman, R., (1999) Intrapreneuring in action: a handbook of business innovation. Berrett-Koehler Publishers, San Francisco. Read More