The Concept of Entrepreneurship - Literature review Example

? Entrepreneurship Introduction Entrepreneurship refers to the practice of setting up new businesses. Entrepreneurs therefore concern themselves with the assessment of new business opportunities and the maximization of profit creation and revenue accumulation. Entrepreneurs are people who create the businesses and capitalize on new opportunities. In a small business context, entrepreneurship is mainly concerned with wealth creation (Fournier, 1998). Such ventures consider entrepreneurship as a means of accumulating more wealth by managing the small business and growing them. All entrepreneurships share the primary objective of increased profitability, this implies that the entrepreneur must employ every feature possible and manipulate the internal structure of the organization in order to increase its market share thus accumulating more wealth. Small businesses have smaller management structures, which make management easier thus steering the desired growth through wealth creation as discussed in the essay below. Entrepreneurs take risks on a daily basis. In their operations, they seek to increase their market shares thus compelling them to carry out extensive market researches with the view of increasing their operations. Small businesses feel the pressure since they have smaller capitals but have the desire to increase their capital bases through heightened wealth creation. To achieve such, most small businesses diversify their operations thus spreading their risks across several industries. Most small business suffers from uncertainty, by diversifying their operations and products they venture into different industries and markets thus retain a portion of every market. With such an operation, the businesses have a surety of an excellent performance in at least an industry thus cushioning the rest from possible loses. The uncertainty and the lack of adequate capital thus compel small entrepreneurs to view entrepreneurship as concerned with wealth creation. Bigger companies have well-structured decision-making organs and make decisive decision on their investments. Additionally, such businesses enjoy larger market shares and larger capital bases. They can therefore take risks and gamble with their investments. Such are the luxuries that smaller businesses do not enjoy. Smaller entrepreneurs approach the practice with the view of making more money and saving as much of it as possible. While a big business like Wells Fargo in the United Kingdom can decide to venture into real estate, a smaller business owned by a sole proprietor may not since such individuals lack adequate capital and may not dare risk their small capital on such a precarious industry. This depicts the inability of smaller businesses to carry out effective market research and capital drives. Big businesses use their money to create more capital while smaller businesses save up their profit in the process of capital accumulation and wealth creation (Peter, 1994). Management, a fundamental operational feature in businesses refers to the coordination of the people concerned in order to realize a set of goals and objectives. The management of small businesses is less coordinated owing to their small structures. Big businesses on the other hand have effectively coordinated structures and therefore make informed investment decisions less likely to incur losses. In a small business context, management is reduced to a one-person affair. Management in an organization comprises staffing, controlling, planning and organizing the activities in a business organization. The functions are all vital in the achievement of the objectives of the business (Homburg, Sabine & Harley, 2009). To big businesses, such functions are well coordinated by professionals who make effective decisions concerning the attainment of the organizational goals. Big organizations have elaborate structures and may not always benefit an individual. In such organizations, the longevity of the business and its sustained profitability is always of more importance to the management and the stakeholders than the accumulation of wealth. The case is different in smaller businesses with smaller management structures, in such businesses; decision-making is the responsibility of the proprietor. When a business serves the interest of the individual, the dreams and aspirations of the business become increasingly compromised as they seek to meet those of the proprietor most of who view business as a means of creating more wealth. Such businesses thus do not carry out extensive marketing and market research, which help the business grow (Parente, 2005). Marketing refers to the management function that investigates, anticipates and satisfies customers’ demands (Thomas & Michael, 2001). Marketing is fundamental in every business organization since it determines the business market share. Small businesses do not carry out extensive marketing owing to the evident lack of infrastructure. Failure to carry out adequate marketing, the business maintains a smaller market niche, which motivates the entrepreneur only to the level of wealth creation. Kotler & Fox (2002), explain that while diversification is fundamental in any business, the process requires increased human capital and revitalized business operations. Bug businesses carry out extensive market researches that help them make investment decisions. Before investing in other industries, a big business would create adequate capital by revamping its operations in a specific industry thus acquiring a substantial share of the market. By diversifying their operations, big businesses seek to make more profits and make such subsidiary investments manage themselves. They hire new personnel o steer such projects and therefore simply monitor the activities of such businesses but as parallel entities in the market (Lane, 2005). A small business may not always have such wide planning and resources. Their idea of diversification is therefore always to cover the risks of dissolution and is limited to the small capital at the disposal of the investor. The investor thus limits the activities of the business to the basic often eliminating such important business operations as marketing and market research, the entrepreneurs considers every profit the business makes as their wealth (Aaker & Aaker, 2010). Just as explained earlier, big businesses have effective structures that manage their finances and aid in decision-making. Big businesses do not therefore consider every profit as wealth for the investors but would use such to increase the company assets thus reducing the cost of doing business and increase the company’s profitability. This implies that while small businesses view their profits as wealth generated by the business to the investors, big businesses use such profits to reduce the cost of doing business and investing them further thus increasing profitability and longevity of the enterprises. Small businesses safeguard the interests of fewer people; such are easy to manipulate thus often turning the individuals’ objectives into the businesses’ main priorities, which is not always the case in big businesses that enjoy elaborate management with clear decision-making structures that safeguard the future of the businesses (Pickton & Broderick, 2005). Big businesses have more operational activities that require more resources than smaller businesses. A business as big as AON in the United States has a big market and determines to increase its market share. To achieve such, the business will invest in large marketing campaigns such as their recent sponsorship of Manchester united in the United Kingdom. The company requires more money to run the expensive media campaigns and the elaborate marketing plans. Additionally, they have a definite market that they must constantly interact with in order to meet their expectations. The profits made by the company in a fiscal year thus requires effective planning in order to secure the future of the business especially given the fact that the market factors vary every year. Additionally, the profits made by the company are divided to the numerous shareholders. The scenario differs in small companies with simple management structures and smaller market shares. Small companies do not incur extensive marketing fees. They maintain their marketing to the word of mouth thus often capitalizing on such cheaper modes of marketing as social media, the profits made by small businesses translate to wealth for the entrepreneur (Heizer & Render, 2011). With a big market share, the big businesses will always tailor their services in order to satisfy the market demand. In a bid to acquire more trust from the market, big businesses will always carry out social responsive investing. Despite being very expensive, big businesses invest in such operations since they increase their market shares by addressing some of the social issues affective their markets. A big business must always show concern for its market. Most economies in the contemporary societies are liberal thus attracting diverse investors. Big businesses thus face stiff competition a feature that compels their involvement in social responsive investing which makes them appeal to their markets. Small businesses on the other hand do not show concern to the needs of their markets. They limit their operations to serving the interest of the proprietors who in most cases seek to accumulate wealth. Some indulge in unethical business practices with the sole objective of maximizing profitability thus increasing wealth to their investors before they shut down (Wallace & Henry, 1922). Activities of such big business as Gazprom in Russia influence the national economy, the collapse of the American Enron in 2001 was a vivid portrayal of the influence that large companies have on the national economy. Such wide spread effects and influence on the lives and investments of other people in the economy command strict government regulation. Governments therefore regulate the activities of such big companies with the view of safeguarding the interest of the national economy. Big businesses operate in accordance to several national legislations, which influence their every operation. Furthermore, the have numerous codes of ethics which they comply with in order to maintain a positive rapport with their numerous publics. Small businesses on the other hand have minimal government regulation since they are too small to affect the economy. Some of such businesses operate without government recognition. They have small unclear structures, which enable their unofficial nature of operations. They primarily serve specific market and interests of the entrepreneur before closing down as governments threaten to crack down on similar operations. Small businesses lack structures to enable growth and expansion, their primary objective is to exhaust the market by accumulating as much wealth as possible before they close down as the market fizzles out. Furthermore, most of the small businesses are intermediaries between the big companies and their markets. This implies that the small business rely on the big companies for some fundamental services such as marketing and market research. As such, the small business does not concern itself with fostering the growth of the brand but maintains its operations to making profits and accumulating wealth. Most of such small businesses cannot expand since their growth is restricted by the operations of the big companies whose products and services they retail to the market. They lack creativity since they do not manufacture the products. They also rely on the market created by the big companies and cannot persuade the market to a particular direction. The best such small companies do is to make profits by pushing the big companies’ products thus accumulating wealth without any attempt of diversification and when the big company collapse as was the case with the American Enron so do they collapse (Tabbush, 2011). Schumpeter, the father of modern day entrepreneurship defines an entrepreneur as an individual who operates and organizes businesses. In doing so, the renowned economist explains that an entrepreneur must create realistic and successful ideas. Market is the most important feature in business. An entrepreneur must determine an effective market thus devises appropriate products or services that will best earn them profitability in such. In doing this, small businesses maintain a reserved approach. Their innovation and creativity to determine a need in the market thus create a market of their own is limited to their small capital. Such investors will therefore always shy from any constructive business by analyzing the amount of risk a business presents. The risk is bigger in smaller businesses than in big businesses since should such risks materialize the small businesses collapses while a big business will always have a secondary source of funding. With such great risks facing their establishment in any market, the small entrepreneurs always portray a pessimist approach to investing since they only view and quantify the amount of risk the business presents. After investing, their primary objective becomes safeguarding their investment from the potential risk always looming in their business horizons. They refute any attempt to expand their operations in order to minimize the risk while they continue accumulating wealth from the small business. Small entrepreneurs thus invest and diversify their investment only after accumulating enough wealth thus minimizing the risk of losing their investments (O'Neill, 2002). Big businesses on the other hand will carry out effective marketing research before investing in any industry thus countering the risks as they present themselves in the market. Additionally, big businesses do not shun diversification since such expand their markets thus safeguarding their profitability. In retrospect, small businesses have ineffective management structures and smaller capitals thus heightening their risks in investment. With such precarious approach to businesses, the business people view entrepreneurship mainly as sources of wealth creation before they decide either to diversify their operation or to fizzle out of the market. Big businesses on the other hand have clear business plans that provide for the adequate capital and indicate their specific markets. They therefore employ the best management practices that do not only safeguard the profitability of the business but also the business’s longevity unlike with small businesses that have indefinite structures and undefined markets (Hill & Jones, 2011). Bibliography Aaker, D. A., & Aaker, D. A. (2010). Marketing research. Hoboken, NJ: John Wiley. Fournier, S. (1998). Consumers and their brands: Developing relationship theory in consumer research. New York: New York Times. Heizer, J., & Render, B. (2011). Principles of Operations Management. Upper Saddle River: Prentice Hall Hill, C. W., & Jones, G. R. (2011). Strategic Management: Palm Beach State College Edition BAS Capstone Course 9th E. Mason, OH: Cengage Learning. Homburg, C. Sabine, K. & Harley, K. (2009). Marketing Management - A Contemporary Perspective (1st edition). John Wiley & Sons. New Jersey, U.S. Kotler, P., & Fox, K. F. A. (2002). Strategic marketing for educational institutions. Upper Saddle River, NJ: Prentice-Hall. Lane, M. (2005). Socially Responsible Investing: An Institutional Investor’s Guide, Euro money. London: Aspen. O'Neill, T. J. (2002). Life cycle assessment and environmental impact of poymeric products. Shawbury, Shrewsbury: Rapra Technology Ltd. Parente, D. (2005). Advertising Campaign Strategy: A Guide to Marketing Communication Plans. South-Western College Publications. Boston, U.S. Peter W. G. (1994). The Management of Projects. New York: Thomas Telford. Pickton, D. & Broderick, A. (2005). Integrated Marketing Communications. (2nd Edition). London: FT Pearson. Tabbush, et al. (2011). MBA primer: Marketing management 3.0 instructor-led printed access card (3rd ed.). Mason, OH: Cengage Learning. Thomas, D. & Michael, C. (2001). Successful Management Projects. Oxford: OUP Publishers. Wallace, C. & Henry, G. (1922). The Gantt chart, a working tool of management. New York, Ronald Press. Read More