Comprehensive Intellectual Capital Management - Essay Example

BU6602 ENT Assignment April Task Table of Contents Introduction 3 Discussion 4 Literature Review 4 Critical Analysis 7 Conclusion 9 Introduction The prime intention of any business is to attain maximum profitability. Apart from this, the other motives include attaining superior competitive position and sustaining in this competitive landscape among others. It is the entrepreneurs, managers or the owners of any business who undertake the responsibility of fulfilling the aforesaid objectives. Small businesses are a certain group of autonomously owned enterprises that are organised for obtaining and maximising profits. It is worth mentioning that the employees and the size of a small business vary from one another at a broader scale. The small businesses have gained popularity in this modern day context due to their effective utilisation of operational modes that often acted as saviours of economies at the time of economic turmoil. However, it can be affirmed that entrepreneurs are linked with a small business, as they are involved in the tasks of promoting innovation and preparing themselves for addressing along with mitigating underlying risks that might occur while performing varied operational functions (Pearson Education, Inc., 2014). Considering the fact that the small business enterprises often possess limited resources, the entrepreneurs have to be much more efficient in organising and developing the available resources so that the maximum amount of benefits can be reaped. Moreover, the entrepreneurs must possess the characteristics of making effective decisions, having high energy level, identifying the risks and adopting measures to mitigate such risks among others in order to fulfil the aforesaid objective (Pearson Education, Inc., 2014). It has been apparently observed that the entrepreneurs or the owners who possess effective leadership qualities and displays innovative skills are successful in developing their respective small businesses (Stokes & Wilson, 2010). With this concern, the essay tends to critically discuss the provided statement “sometimes the manager of the small business does not have the capacity to operate it successfully. The owner lacks the leadership ability and knowledge necessary to make the business work” (Scarborough, 2012). Various significant aspects like an entrepreneurs’ role in developing a small business and the necessary skills that require by the managers or the owners would also be taken into concern while discussing the aforesaid statement. Discussion Literature Review As discussed by Mazzarol (2004), strategic management is a term, which is broadly connected with large, medium as well as small-sized businesses that are normally functioned by respective managers or owners (Scarborough, 2012; Karami, 2007; Mazzarol, 2004;). According to Karami (2007), the notion of strategic management is recognised as one of the important factors, which make firms to attain greater success. It can be apparently observed that there exists a slight difference between writing down a business plan and efficiently implementing it into business (Mazzarol, 2004; Karami, 2007; Burgelman & et. al., 2009). Specially mentioning, leadership ability of a manager or an entrepreneur is one of the decisive aspects, which aids in accomplishing higher growth and maximum profitability. Considering the fact that the small business organisations are highly reactive towards developing entrepreneurial decision-making procedure, the entrepreneurs must remain quite effective and conscious about taking decisions related to effective utilisation of the accessible resources (Lee-Ross & Lashley, 2009; Kao, n.d). The behavioural concern of entrepreneurship often proves to remain much effective for every size of businesses. When considered especially for a small business, the effectiveness of entrepreneurs eventually becomes directly proportional to the overall development as well as the growth of the business (Institute for Competitiveness & Prosperity, 2012). The managers or the owners having a clear planning about long-run abilities can operate their respective small or large businesses and plan accordingly to monitor the growth of the businesses, leading towards overall development (Volery & et. al., 2013; Charantimath, 2009). In relation to the provided statement, it is often noted that the managers involved in conducting small businesses does not possess the capability towards operating the same in an effectual manner. This might be owing to the reason that the managers lack in applying their leadership abilities as well as knowledge that are indispensable to make the businesses work accordingly. Moreover, facing problems by the managers of small business relating to the limited availability of resources can also hinder them towards operating their business successfully. In this regard, Hisrich & et. al. (2010) argued that the proper identification of the resources and their effective allocation often becomes crucial for smoothly operating small businesses. With regards to the statement provided, it can be affirmed that the gaining momentum of globalisation and the development of pioneering technologies have enhanced the ability of the managers to become adapt with the modern strategies and develop an effective business. The development in the knowledge base of the entrepreneurs help them to conduct a better strategic analysis of the market opportunities and also update various pioneering technologies involved in the development of the businesses (Tanoira & Valencia, 2014; Wiklund & Shepherd, 2003). Small organisations are often found to face crucial challenges due to their respective size, market power and most vitally research and development aspect. However, considering the flexibility of smaller businesses, it can be affirmed that these businesses adopt changes far more flexibly in comparison with the larger organisations (Roy & Sikdar, 2003). According to the report published by Danish Ministry of Business and Industry & Danish Ministry of Education (1998), incorporating changes towards developing business is quite crucial. While operating at the backdrop of small organisations, it can be apparently viewed that ineffective decision-making eventually lead towards incurring huge loss. Knowledge being the pivotal factor in future development of businesses irrespective of their size has to depend on the expertise of the managers or the owners (Danish Ministry of Business and Industry & Danish Ministry of Education, 1998). As stated by Hormiga & et. al. (2010), the importance of undertaking research from several hypothetical perspectives within the arena of entrepreneurship lays in examining the association prevailing between intellectual capital and stresses on the importance of intangible assets. According to Hormiga & et. al. (2010), apart from having deficiency in leadership abilities as well as knowledge, managers conducting small businesses fail to operate the same successfully at certain times due to having shortage in the identification of intangible assets. Notably, most of the firms dealing with small businesses are not able to recognise their respective intangible assets, resulting in hindering them towards obtaining superior competitive position. In this regard, the small business managers or the owners must remain aware of managing their intellectual assets in order to preserve long-term competitiveness (Hormiga & et al, 2010; Al-Ali, 2003). Conceptually, intellectual capital is highly important for the development of a new venture in the start-up phase of a small business. As discussed by Al-Ali (2003), the start-up phase of a small business tends to be less bureaucratic wherein innovation thrives in a liberal environment. Specially mentioning, for competing with the companies performing large businesses, it is quite necessary for the organisations conducting small businesses to adopt as well as apply varied strategic forces and exchange diverse information along with experience. Moreover, the task force of should concentrate on the contradiction between standards that are used in assessment of intellectual and intangible assets, which would help in the further development of the business in the long run (Al-Ali, 2003). Critical Analysis With regards to the above discussion, it can be ascertained that small businesses organisation and entrepreneurs are interdependent in terms of operations. This can be justified with reference to the fact that growth of a business relies on the development of entrepreneurs’ skills as well as qualities. The large sized businesses of IBM, General Motors and Walmart are found to keep greater control over their respective vast resources and products or services, which eventually contributed in attaining huge success as compared to mid-sized businesses. However, it has been critically argued in a recent study that small businesses are facing intense market competition from large-sized businesses like Walmart. This can be justified with reference to the fact that Walmart employs in excess of 1.4 million people and a substantial portion of consumers visit diverse stores of the company for shopping every week. This is where the small businesses are lacking behind, resulting in facing greater market competition with the large-scale business of Walmart (Hatten, 2012). The argument made by Lee-Ross & Lashley (2009) clearly depicts that one of the vital constituents of a small-sized business is the expertise of an entrepreneur, manager or an owner, who is vested with the ability or power to identify the prospects for gaining greater success. In this regard, Lee-Ross & Lashley (2009) affirmed that the propensity of an entrepreneur to identify the gaps persisting in the business markets, which is pretty difficult and complex as well. However, an argument has been made concerning that the entrepreneurial behaviour is not the only factor, which helps in making effective decisions, but it is also the political, economic as well as technological landscapes that support in identifying and developing a small-sized organisation. Hence, it can be affirmed from a broader understanding that the development of small businesses is not completely dependent on the capacity of the entrepreneurs at the backdrop of sudden changes observed in political or environmental landscape (Lee-Ross & Lashley, 2009). Based on the observation made by Lee-Ross & Lashley (2009), there exist several reasons for the failure of a small business. Considering the statement, which evoked the question of entrepreneurial capacity, the most prominent backlog could be the emotional attachment of the entrepreneurs with the business idea. The business ideas selected by the entrepreneurs would not be left behind irrespective of all the odds that they face. Identifiably, this sort of situation is faced especially in the hospitality business wherein the entrepreneur fails to make effective decisions in relation to analyse the market opportunities (Lee-Ross & Lashley, 2009). Despite the fact of persisting numerous threats in developing a small business, the knowledge as well as the leadership abilities of an entrepreneur proved to be determining factors of business development. Based on the above arguments, it can be ascertained that the progression of a small business is heavily relied on the capacity of the entrepreneurs to anticipate the risks and the threats posed by other determining factors. It has been often observed that the mangers, owners or the entrepreneurs lack managerial capabilities in recognising the potential business markets for marketing their products successfully. Also, due to the existence of limited resources, small businesses lack in executing effective infrastructural facilities, which gets multiplied by having inadequacy in making effective planning, hindering the operational procedure of such businesses efficiently (Kumar, 2008). Conclusion Based on the above analysis and discussion, it can be affirmed that there lay several external factors that impose adverse impact on the operational performance of small businesses. However, effective leadership qualities and innovative skills might prove to the imperative factors for developing small businesses in long run. Specially mentioning, an entrepreneur or a manager is regarded as the decision maker of a firm, possessing the ability to control all its operations. The small business organisations being highly flexible require greater managerial capacity of the entrepreneurs to develop overall performance (Coulter, 2003). Entrepreneurs’ ability to identify the varied influential factors can play an imperative role in developing small businesses at large. The efficiency of the managers in predicting the future prospects often serve as the deciding factor for developing a small business from long run perspective. Specially mentioning, in order to cope up with the challenge of making the business to survive in this competitive setting, the entrepreneurs require upgrading their respective skills of innovation and upgrading themselves in respect to the technological changes occurring regularly. It is obvious that more entrepreneurs develop their respective managerial skills, greater development in small businesses can be witnessed from a long run standpoint. Thus, it can be concluded that the provided statement is duly considered to be justified one, revealing that the managerial capacity of the entrepreneurs is questionable in the backdrop of any small business. The critical factors like limited capacity and restricted operational mode among others eventually create a backlog for the entrepreneurs to develop their managerial skills, resulting in hindering the advancement of small businesses at large. In order to compete with large-sized businesses, the managers conducting small business require developing their respective knowledge in order to make such businesses work in an effective manner and attain predetermined business targets within stipulated time frame. References Al-Ali, N., 2003. Comprehensive Intellectual Capital Management: Step-By-Step. John Wiley & Sons, Inc. Burgelman, R. A. & et. al, 2009. Strategic Management of Technology and Innovation. McGraw- Hill Higher Education. Charantimath, P. M., 2009. Entrepreneurship Development and Small Business Enterprise. Dorling Kindersley. Coulter, M., 2003. Entrepreneurship in Action. Pearson Education Inc. Danish Ministry of Business and Industry & Danish Ministry of Education, 1997. Intellectual Capital Accounts Reporting and Managing Intellectual Capital. The Danish Trade and Industry Development Council Memorandum. Hatten, T. S., 2012. Small Business Management: Entrepreneurship and Beyond. Cengage Learning. Hormiga, E. & et. al., 2010. The Role of Intellectual Capital in the Success of New Ventures. Int Entrep Manag J. Hisrich, R. D. & et. al., 2010. Entrepreneurship. McGraw- Hill Higher Education. Kao, R.W.Y., No Date. Journal of Small Business and Entrepreneurship. Entrepreneurship. Karami, A., 2007. Strategy Formulation in Entrepreneurial Firms. Ashgate Publishing Company. Kumar, A. S., 2008. Small Business and Entrepreneurship. International Publishing House. Lee-Ross, D. & Lashley, C., 2009. Entrepreneurship and Small Business Management in the Hospitality Industry. Elseiver Ltd. Mazzarol, T., 2004. Strategic Management of Small Firms: A Proposed Framework for Entrepreneurial Ventures. Proceedings for the 17th Annual SEAANZ Conference 2004. Pearson Education, Inc., 2014. Characteristics of Entrepreneurs. The Foundations of Entrepreneurship, pp. 1-30. Roy, A. & Sikdar, A., 2003. Technology Absorption in Large and Small Enterprises: A Proposal for Comparative Research. 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