Mode of Entry into a Foreign Country - Assignment Example

Entrepreneurship Name Institution 1. Mode of entry into a foreign country These are the various arrangements that an entrepreneur can employ to do business across borders. The most common modes include the following: Exporting – this is the practice of producing goods locally and shipping them to overseas markets. There is the advantage of widened market and customer base for the producer. The major challenge is negotiating entry bureaucracies and probably sourcing the best destination. Licensing – this entails using the property of the licensor in the target country. These properties are usually intangible assets that are of value to a certain line of business. Such could be production skills, trademarks and patents. Joint Venture – this entails taking up ownership of an entity in a different country. This can be by way of a partnership arrangement with a foreigner or buying shares in an existing business. Direct Investment – this entails committing resources to an investment in a country that is not one’s home country. The zeal for this arrangement is usually presence of a more appealing business environment than the home country (Jusuf & Biljana, 2011). 2. Importance of culture in business It is worth noting that the modern business field is defined by multiple interactions between people of different cultural backgrounds. This state of affairs must be seen by investors as a business opportunity rather than a hindrance. In essence it is diversity that creates the need and desire to trade. Success in the interconnected world will therefore require the participants to have the capability to compete effectively the multicultural environment. Managing diversity in developing economies can bring forth many advantages. For instance diversity brings a new touch is the staff base. People with different cultural backgrounds are talented differently and consequently will bring varying attributes to the business. The knowledge and perspectives of these people can be used as a source of competitive strength in business (Jusuf & Biljana, 2011). People with varying cultural experiences will have the ability to respond to changing needs of customers. This as opposed to if these people were drawn from the same folk. The flexibility so achieved is a significant toll for the business to respond to the ever changing consumer needs in the market place (Granovetter, 1973). Cultural diversity enables the entity to gain acceptance from the local communities. The enterprise finds it easier to penetrate to new consumer groups since it is backed by the staff composition of its human resource function. Furthermore different cultures present different demands for goods and services and this is a great chance for increasing sales and by extension profits. 3. Entrepreneurs Qualities and Attributes of Entrepreneurs Confidence – this is necessary to create the sense of self esteem and belief that goes wwith taking difficult decisions. Sense of Ownership – the person needs to take up responsibility for all actions either by him/her or his/her agent. He/she must view all problems and successes as his/her own. Ability to communicate - the ideas of the entrepreneur may go unrewarded if they are not promptly passed on to those who should execute them. In this sense the incumbent must possess skills of making people see a situation from his/her point of view. Team player – a good entrepreneur must relate well with the people around the business premises. He/she must instill confidence and self belief upon them so that they can take up duties without fear of intimidation (George, 2005). Advantages The most enticing merit of being in this field is the massive level of independence attaching. It gives the incumbent the option of taking own decisions without being answerable to anybody. One becomes his/her own boss and hence can formulate own job description, schedule working hours and organize work without fear of intimidation. High income potential is yet another significant complement for entrepreneurs. They are able to enjoy unlimited levels of remuneration. Hard work and shear commitment is reflected in the reward package. This as opposed to employment contract where salary is restricted to a fixed amount and do not adjust with increase in company revenues (George, 2005). There is much excitement working as an entrepreneur. This is because one can monitor progress from the time of developing business idea, crafting the strategy and finally seeing the business grow and develop from a simple investment to a huge corporate venture. Disadvantages One of the demerits of working as an entrepreneur is absence of a regular definite pay. There is no guarantee or security that at the end of the day you take home a certain amount of income. This is due to the uncertainty that subsists in the business field. Frequent changes in income levels of households and fluctuations in aggregate demand are responsible for this state of affairs. There is very high risk assumed once one venture in business. There is always high initial investment without an assurance that the same would be recovered and if yes when. One has to assume that all will be well and that calamities will not strike otherwise all fortunes would drown. Due to overreliance of self effort the work schedule sometimes gets too irregular such that one may be attending to work at odd hours. In an attempt to retain supervision the owner is forced to be at the business premises at all times. There is the accrued risk of fatigue and other stress related complications (Lee & Peterson, 2000). There may be inadequacy in management due to inability to source for skilled manpower. Highly qualified workers are expensive to hire and it is always difficult for small entities to compete with huge organizations for labour. Small businesses are not able to offer competitive remuneration and hence cannot attract the best professionals available. Also, there is the tendency of workers to want to work in big renowned companies. This means that even those employed by small operators will shift to better employment once they get e chance and this scenario make it difficult for entrepreneurs to retain their staff (George, 2005). Mistakes common to entrepreneurs Entrepreneurs get it wrong on certain issues of their business. One such common mistake is the unrealistic valuation expectations of the worth of their venture. They wrongly presume that it is financially very stable at the initial stages such that it can withstand the waves of the market trends. The next step they take based on this high valuation is to seek high levels of borrowed capital to try and grow the entity tenfold within a short time. Many of the times is that the fortunes of the business fails to meet the servicing requirements of the debt and this leads to immature closure of the entity. Another mistake done by beginners in business is poor analysis of strengths and weaknesses. When this is wrong done the entrepreneur is unable to know his/her competitive competencies and hence cannot utilize them to business’ advantage. On the other hand failure to recognize one’s weaknesses denies him/her the chance to devise methods of mitigating the effects of the same (Lee & Peterson, 2000). Starters of business run the risk of creating the wrong legal structure for their businesses. They fail to recognize the fact that they have to operate within a predetermined legal framework which is subject to amendments over time. The business becomes subjected to numerous lawsuits because of not complying to specific state regulations. These suits take up a lot of time effort and resources of the business besides creating negative publicity on the eyes of the consumers (George, 2005). Prevention measures of these mistakes From the onset an entrepreneur should hire the services of a professional preferably an investment analyst. This move would assist the owner to get a better picture about the market, industry and even the environment in general. They also need to the experts to enlighten them on the best financing methods based on the business growth potential and market risks. Furthermore the starters need to put into consideration the legal structure they adopt for their businesses. They should be guided by the national laws existing and other standards as set by regulatory bodies. Seeking the advice from law agencies and other advisory firms would prove a prudent move. 4. Management skills necessary to entrepreneurs A competent entrepreneur will require strong planning skills. This entails the ability to see ahead of time what is likely to benefit the business and deciding now what will be done in the future. Planning is what largely determines the level of success that will be realized. This implies that an entrepreneur has to spend enough time, effort and resources sharpening the same skill (Gupta, 2004). Another important attribute is the ability to organize people and events. This involves laying down a structure that shows where each employee falls in the ranks of authority. Each position is clearly defined and its responsibilities well formulated. The entrepreneur then positions himself/herself so as to be able to efficiently monitor the functioning of all the departments set. He/she must ensure that there is no collision of duties between individuals. Entrepreneurs need to possess strong management skills that will spur their businesses ahead and enable them to keep up with competition. While starting up a business venture would call for creative thinking and innovation, having the same remain successful and develop to a large venture would require specialized capabilities in management. These skills must be distinguished from the core skills that a person will be required to have for general employability. Being a successful entrepreneur implies that one possesses the competence to apply professionally acquire skills in real life business situations. Success in business calls for top class leadership skills. The position of a leader is different from that of a manager in that a while a manger draws authority from his/her position, the leader usually has to apply personal competencies to have things done. Basically, a leader provides direction, guides and inspires other people to a certain way of conduct or behavior. The technicality with playing the role of a leader in business context emanates from the fact that there is usually no express authority on how leadership duties should be handled. A leader is expected to persuade people to do things in a manner they would not have done on their own motion. He/she acts as the source of motivation for the people working with him/her (Gupta, 2004). Ability to control all activities in the business is also a vital ingredient in success of an entrepreneur. Controlling implies measuring the actual performance and comparing the same with the plan. Once he/she has done this, areas of deviation from norm are identified and corrective measure devised. The activity must be done regularly and consistently (Gupta, 2004). 5. Importance of entrepreneurs in emerging economies Entrepreneurs enhance the intensity of research and development. Due to the innovative attributes they possess they add spice to the business field by testing new methods and committing resources to research. This greatly compliments the work of government and the large firms and assists to fasten the rate of modernizing these economies. Another major contribution is the diffusion of knowledge. Many entrepreneurs in developing countries have a history of working in bigger and well established firms. They apply the experience gained to start and rub their entities. When they hire semi-skilled workers they pass on their knowledge to them and make them better contributors of economic advancement. This in effect increases the number of informed population in the country (Bruton, Dess & Janney, 2007). The practice of entrepreneurship promotes social network. This is the interrelationships that subsist between countries and businesses based on mutual trust. When entrepreneurs trade with other organizations from other countries the social ties between the countries are strengthened and this is healthy for the growth and development of the two nations (Zhou et al., 2007). There is massive creation of international entrepreneurial orientation when a people venture in business. People share innovations and experiences across borders and this helps the transfer of information and skills from developed world to developing nations. People also become proactive to investment as a result of being challenged by their counterparts from developed nations. The importance of entrepreneurs in utilizing idle capacity of resources in developing countries cannot be slighted. They absorb the semi-skilled labour that the well to do enterprises is not willing to hire. They have also been on the fore front in utilizing the byproducts of big manufacturing companies and transforming them to usable form (Granovetter, 1973). Their products become an alternative to the low class citizens who are unable to afford the expensive products of big companies. Finally and most importantly is the contribution of entrepreneurs to government revenues. Many developing countries draw much of their income from the small and medium business enterprises. This comes by way of income taxes and business licenses. It follows therefore that without them these governments would almost find impossible to run. In this regard the entrepreneurs contribute to the welfare of the people and help to realize the development agenda of their governments (Hansen et al., 2011). References Bruton, G. D., Dess, G. G., & Janney, J. J. (2007). Knowledge management in technology focusedfirms in emerging economies: Caveats on capabilities, networks, and real options. Asia Pacific Journal of Management, 24(2), 115-130 Estrin, S., Meyer, K. E., & Bytchkova, M. (2006). Entrepreneurship in transition economies. In M. Casson (Ed.), The Oxford handbook of entrepreneurship (pp. 693– 725). Oxford: Oxford University Press. George, G. (2005). Slack resources and the performance of privately held firms. Academy of Management Journal, 48: 661-676. Granovetter, M. S. (1973). The strength of weak ties. American Journal of Sociology, 178: 1360–1380 Gupta, V. (2004). Entrepreneurial leadership: developing and measuring a cross-cultural construct. Journal of Business Venturing, 19(2), 241-260. Hansen, J. D., Deitz, G. D., Tokman, M., Marino, L. D., & Weaver, K. M. (2011). Cross-national invariance of the entrepreneurial orientation scale. Journal of Business Venturing, 26(1), 61-78. Lee, S.M., & Peterson,S.J. (2000). Culture, entrepreneurial orientation, and global competitiveness. Journal of World Business, 35(4): 401–416. Zhou, Lianxi, Wu, W.-ping, & Luo, X. (2007). Internationalization and the performance of bornglobal SMEs: the mediating role of social networks. Journal of International Business Studies, 38(4) Jusuf Z. & Biljana A. (2011). Factors that influence entry mode choice in foreign markets, A European Journal of Social Sciences, 22(4) Read More