Critical Success Factors - IT Entrepreneurs in China - Case Study Example

Critical Success Factors Name Course Lecture Date Abstract Entrepreneurs have certain critical success factors that they need to consider prior to starting their businesses. This paper discussed the critical success factors for IT entrepreneurs in China. Based on the paper IT entrepreneurs needs to ensure that they have good management and that they obtain patent form the relevant bodies. Another critical factor to success is having a passionate behaviour and internal motivation this will enable the, to continue despite the challenges that they may face. In addition to these they also need to conduct proper marketing and strategies in marketing their idea. By doing so they will be able to attract a lot of customers, IT entrepreneurs also need to engage in research and development in the aim of making their products unique. Lastly after they have established their business they also need to have good customer service so as to retain and attract customers. Introduction Entrepreneurs were an essential component of the economic system even prior to the time the term emerged. The term evolved from one century to another and currently we are now witnessing a new breed and a wide range of entrepreneurs. With the broad variety of resources and the emergence of communication technologies, entrepreneurs are now flourishing from every corner of the globe. In the 20th century, all that an entrepreneur needed was a considerable amount of money so as to create a business. In the current industry, capital is no longer an obstruction for most entrepreneurs. There is a broad range of entrepreneurs from social to manufacturing, but, currently the real battle for success seems to be augmenting from the start-ups which are technology based. Technology entrepreneurship is an essential aspect of economic development. New and advanced technology ventures are said to have various positive impacts on aspects such as employment, and they can also revitalize industries which are making use of techniques which are disruptive. This offers the basis under which researchers can carry out research in the new and emerging field of IT entrepreneurship. The number of entrepreneurs in China keeps on increasing, and a considerable number of them seem to be interested in the technology industry. This paper sets out to discuss and analyze certain critical factors of success of I.T entrepreneurs in China. Critical factors to success of IT entrepreneurs Invention protection through Patents One critical factor in success of I.T entrepreneurs is patents. A patent is referred to as the exclusive right that is granted to an invention and the patentee. The patents office gives the right, and it allows the inventor to exploit the invention for a certain period. The invention may be in the form of a product or a process that offers new and advanced ways of doing something or providing a more technical solution to a problem that exists in the globe. When technology entrepreneurs are granted a patent by the respective bodies, they are likely to benefit in a number of ways thus ensuring their success (Davidow 1986). Patent protection provides that, the invention that is protected cannot be commercially used, made, sold or distributed without prior consent from the owner. The patent is also granted the right to decide who can or who cannot make use of the patented invention during the period within which the invention is protected. In relation to this, the patent owner have the full rights of selling, using and also granting permission to other parties to make use on an invention and this is usually done with some mutually agreed terms and conditions. Patents seem to be an important success factor for I.T entrepreneurs since it offers incentives to them. Particularly, the inventors are worthy of recognition for their creativity, and this should also be coupled with some material rewards for their inventions. Additionally, the incentives are more likely to encourage more innovation, and this will play an essential role in enhancing the quality of life of individuals. Additionally, by protecting the entrepreneurs’ ideas, the patents ensure that people and businesses protect their investment and work. When this kind of protection is not available, it will be disheartening for entrepreneurs to invest vast amount of money on their inventions and their competitors copy their ideas immediately without investing much in terms of time, hard work and money (Davidow 1986). Thus by the protection, entrepreneurs are able to recoup their investment in terms of money and time spent in the invention. As a matter of fact, I.T entrepreneurs who are cropping up would be defeated by the already established entrepreneurs who take up their ideas and can produce it in a more efficient way. Patents are essential for all investors irrespective of their industries. They ensure that people are giving a fair working ground and that no one can take advantage of their ideas and work of other inventors. Thus, it is evident that patents are an essential factor in the success of I.T entrepreneurs. Passionate behaviour and internal motivation The other success factor is passionate behaviour. What people achieve in life is as a result of various aspects that is how smart one can work, the courage that one has, and the leverage that is needed. Indeed, hard work is also closely linked to how passionate one is about what they are doing. A key determinant of success for entrepreneurs is passionate behaviour and mostly from the founders. Individuals who are not passionate about what they are doing are likely to take advantage of the first barrier that they come across as an excuse for their failure. On the contrary, people who are passionate will take all the necessary measures to ensure that they can overcome the barrier to success. IT entrepreneurs will always overcome barriers no matter how many they are since they want to succeed. In case they face an obstacle in terms of lack of finances, they will look for all possible means and for all those parties that can fund their ideas and make it a reality and profitable (Roure and Maidique 1986). IT entrepreneurs who are internally motivated will put all the required time and effort so as to ensure that they succeed. Based on previous studies, there are a number of aspects that drive entrepreneurs, and they are classified into two broad categories that are; the pull factors and the push factors. The push factors are associated with the adverse situations while the pull factors are associated with positive developments. The push factors will include but are not limited to job dissatisfaction, low income, lack of employment opportunities, and strict working hours. The pull factor that motivates the IT entrepreneurs relates to the need for achievement and the contribution that their development can make to the society (Kakati 2003). Thus a passionate and internally motivated entrepreneur is more likely to succeed since they have already set goals that they aim at achieving. Investors and availability of finances A great number of IT entrepreneurs acquire the initial funding and then with time raise additional funds for acquisition of the firms. Based on these funding seems to be an essential aspects of IT entrepreneurs all over the globe. Based on these, the Chinese government needs to offer the necessary support to fund IT entrepreneurs so as to enhance innovation in their country. Foreign investment also needs to be encouraged. A number of studies have also noted the essential benefits that are associated with venture capitalists. Some of the benefits includes but are not limited to, acquiring of additional finances, improvement in the investment decisions and also offering of other non-financial forms of assistance for instance in strategic planning and also offering help in the recruitment of key executives (Hellman and Puri, 2001). Through such support, the business ventures are more likely to succeed, and the entrepreneurs will be motivated to offer more enhanced innovations to the market. Investors are seen as an essential to success of I.T entrepreneurs. All people tend to think differently about the various sources of investment. Individuals tend to focus more on how much money can be raised and they do not differentiate between the different sources of the money. The quality of the source of the money as well as the rate at which the money is obtained is essential factors in determining the success. Investors can offer momentous leverage. Discussed in the upper factors is an issue that success is not just a function of how smart or how hard we can work, but it also depends on how much leverage we encompass on what we are doing (Eisenhardt and Brown 1998). We can be able to convince and persuade other people to work hard, and this will help in making us succeed. A great number of investors shy away from funding start-ups due to the risk involved that the venture may fail. Thus, a critical aspect of success of IT entrepreneurs is the availability of investors who have faith in the idea and are willing to support it despite all the associated risks. Management, leadership and strategy adopted Management is also essential to the success of IT entrepreneurship. The pace at which the environmental changes are occurring calls to better management of entrepreneurship ideas and this means that there should be a collaboration between the skilled managers and teams that are capable of managing changing markets (Eisenhardt and Brown 1998). Based on Roure and Maidique 1986, initiators of high-tech ventures are more inclined to creating larger and more complete teams. Thus in essence, a diversified team that is composed of people who has technological expertise and those who have business skills in various areas such as finance and marketing is seen as a determining factor for success of IT entrepreneur's ventures. IT entrepreneurs ventures are not started by individuals only, but they are composed of teams. In all start-ups, there is usually a leader who coordinates the enterprise and enables those who are involved in the function and develop through the various stages of development for the success of the venture. The coordinators or leader need to possess the ability to work in different sectors for instance, from the understanding of aspects of how to negotiate with the various actors (Hellman and Puri, 2001). Leaders also need to have a clear and concise understanding of the cross-sectional issues and ways of securing public or public sector investments. There are two major schools of thoughts when it comes to the start-up strategies that can be adopted by IT entrepreneurs so as to gain a competitive advantage in the industry. The formal policy that is usually advocated for by frameworks such as that of Porter the "the five forces model" which analyses the forces that drive competition in the industry and the adaptive approach that was advocated by Mintzberg 1994, where firms and organizations' are run based on the mission and decisions made based on experience and learning and they are based on intuition and creativity of the key personnel in the organization. IT entrepreneurs need to make strategic decisions on whether they will compete broadly across a great number of geographical segments or they will focus on a limited number of geographic markets. At the same time, they can choose to adopt multiple strategies. According to Kakati 2003, various strategies seem to be the logical choice and it mostly applies if the firms have multiple resources. Marketing Based on Gardner 2000, there exist a number of exclusive characteristics for the high-tech market environment. Other authors such as Goldman 2001 and Gardner 2000, also emphasizes that, the eventual access to global markets as being essential for the survival of IT entrepreneurs. Topical developments in the marketing field offer an attractive insight into the process of entrepreneurship. Market orientation is defined as the systematic process of recognizing opportunities and tracking trends in the marketplace, and this is done through the utilization of information dissemination and intelligence generation activities. On the other hand, for a considerable number of entrepreneurs challenging to develop and maintain multiple resources in an efficient manner, the most natural choice is to follow a customized strategy. Cooper 1994, a strapping market orientation is an essential factor to success of almost all entrepreneurs. Market-oriented ideas seek to the customers latent and expressed needs and thus come up with solutions that are aimed at developing the solutions based on the various customer needs. In addition to marketing, another success factor that falls under this category is the market attractiveness. According to Nesheim 1997, the target market for the entrepreneurs ought to be large enough and at the same time, it should be expanding rapidly, thus IT entrepreneurs need to consider aspects such as the market size, competition intensity, revenue margins potential; and the number of potential customers. Other authors such as Mishra et al., 1996 have asserted that, market growth and size are in a way positively related to product success. Thus, if the venture has a small customer base, it is more likely to fail as compared to an investment which has a broad customer base. Nevertheless, there seems to be agreement that expertise on marketing effectiveness and marketing activity of new IT products and services are critical to the success of the ventures (Gardner et. al., 2000). Research and Development According to Davidow 1986, excellent products and services are usually invented in the marketing department. Thus, product and services of IT entrepreneurs must meet the foreseeable market need. Being the market leader and developing new technologies are not essential determinant of success. In this regard, the issue of what the consumers need and want calls for a combination of technical skills and marketing. Moreover, the advantage of buyer and seller relationship and most especially in the development of new products seems to be an area that is being studied a lot. At the same time, there needs to be strong links between all the other functional areas and the R&D department in all organizations so as to emphasize the important role played by effective integration of marketing and R&D for innovation success. Goupta and Wilemon 1990 express the association between R&D and marketing as one that is aimed at ensuring that an innovation succeeds. The failure to integrate marketing and R&D early in the innovation is the main contributor of product failures. Thus all firms irrespective of the industry they operate in need to undertake constant research and development to enhance their product offering to their consumers. This will ultimately ensure that their products are ahead of their competitors. Uniqueness of product or service Products and services which have some unique character, are superior and are highly innovative tend to perform better in the market. Consequently, revolutionary breakthrough innovations have some added advantage in that, they are clearly differentiated and at the same time, they possess high barriers in regard to entry of new competitors. However, it is also very hard to demonstrate the potential of the market or offer evidence of profits. In relation to this Perlmuter 2003, argues that the managers and leaders who will head the ventures need to have a clear understanding of the markets and all the available limits and thus channel their creativity to offer solutions that offer the consumers with complete products. Additionally, customers are more likely to make use of products and services which are in some way differentiated from the previous ones. The uniqueness and superiority of the products and services will attract a high number of consumers hence the success of the product and service being introduced by the IT entrepreneur. Customer service Customer service is also a critical success factor of IT entrepreneurs is quality of customer service offered to the consumers or clients of the products or service. Customer service is a consideration that all entrepreneurs need to make irrespective of their industry. Customer service is more related to the service that is provided to the consumers before, during or after making a purchase. No matter the size of a business or a venture, there is a need to portray exceptional customer service skills to ensure the success of the enterprise (Goldman 2001). Additionally, the service ought to be offered to the various types of consumers that is the potential, existing and new customers. Although excellent customer service may take up some extra resources in terms of money and time, it can also generate some positive aspects for your business and keep your consumer happy; it can also help the venture in growing and prospering. Companies with excellent customer services skills benefit from referrals and return clients who enjoyed the service. Thus, IT entrepreneurs in China need to make proper use of customer service skills to enhance their service delivery to the consumers. At the same time, the skills need to be revamped after some time to ensure that the employees are still applying them in their daily dealing with the customers. Partnership Partnership offers an excellent opportunity for other firms to learn from one another and at the same time, they are able to access each other resources. Though outpouring research on partnerships and all the other forms of cooperate corporations can be said to belong to the 1990s, little analysis have been made on the nature of the partnerships. Most explicitly, a lot of existing literature contributes a lot to the theory of partnerships and innovation. For instance, they state that right partner selection, trust among the partners, mechanism adopted for fostering cooperation are essential to the success of the partnerships (Cooper 1994). For example, partnership can play a major role in China by helping the companies enhance their innovation capability. Traditionally China is weak in innovation, and this can be based on the fact that due to the country's Confucian nature, they placed more emphasis on humanities rather than on science and technology disciplines. This shows that, IT entrepreneurs in China are in dire need of partnership with other IT professionals from other parts of the globe. For example, they can partner with professionals from the US as well as from Japan. Through the partnership, they are able to exchange technological knowledge ensuring the success of the ventures. Conclusion Based on the above discussion, it is evident that the entrepreneurs are cropping up from every industry. The critical factors of success of entrepreneurs seem to differ from one industry to another. From the above discussion, it is evident that the key factors for success of IT entrepreneurs are patents, passionate and internal motivation, partnership, unique products and services, R&D, marketing, management strategy adopted and availability of investors and financial resources. IT entrepreneurs need to consider all these aspects prior to venturing into their business idea. In respect to patents, they should always ensure that their ideas are protected and through the protection they will benefit when their ideas start generating some income from them. Additionally, they need to market, manage and adopt the best strategies to ensure that their views are well known by the consumers thus ensuring their eventual success. References Cooper, R 1994, ‘New products: the factors that drive success’, International Marketing Review vol. 11, no. 1, pp. 60-76. 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