The Historical Evolution of the Concept of Entrepreneurship - Essay Example

ENTREPRENEURSHIP PORTFOLIO Introduction The historical evolution of the concept of entrepreneurship has been marked with a variety of definitions and perceptions. In the eighteenth century the term meant “a risk taking activity in which enterprising individuals would seek to make a profit by buying and selling goods under very volatile circumstances”. It’s Schumpeter who has provided the best definition of entrepreneurship so far. Modern definitions of entrepreneurship heavily borrow from his explanation. The following definition of Schumpeter encapsulates all essential elements of entrepreneurship with the greatest emphasis on innovation as the most desirable quality of the entrepreneur. “The entrepreneur is the innovator who implements change within markets through the carrying out of new combinations. The carrying out of new combinations can take several forms; 1) the introduction of a new good or quality thereof, 2) the introduction of a new method of production, 3) the opening of a new market, 4) the conquest of a new source of supply of new materials or parts, 5) the carrying out of the new organization of any industry”(Kukoc and Regan, 2008, www.treasury.gov.au). The modern resurgence in the interest of investigating entrepreneurial culture and its attendant socio-economic dimensions has shed new light on its many ill-explored facets. This portfolio will briefly focus on some of these aspects and make insightful comments on its varied, complex and seminal conceptual dynamism. However, its primary objective is to profile its foremost elements in a manner for easier understanding. Analysis 1. The challenge faced by the entrepreneur The modern business organization requires entrepreneurs who are not only farsighted but also shrewd strategists. Thus the challenge faced by modern entrepreneurs is not based merely on ‘risk’ but also on a more complex, fluid and hostile environment 1. 1 Nature of challenge The nature of challenge faced by modern entrepreneurs can be divided into: Strategic Functional Survival Strategic challenges include such factors as risk involved in making decisions about the nature and dimension of threats posed by competitors and the probable response to such threats. Schumpeter’s concept of creative destruction plays here a significant role by enabling the daring entrepreneur to innovate. Thus continuous innovation is a preemptive strategy that forestalls rivals’ anticipated moves (Eggert, 1998, p.209). Next there are functional challenges such as problems associated with production, marketing, finance, quality management, technology, public relations and communications. Each functional area needs the entrepreneur’s attention. Strategic approach enables the entrepreneur to integrate functional variations into the overall system (Donaldson, 1995, p.203). Finally, there is the survival challenge faced by the entrepreneur. This is elated to overall survival of the organization. The entrepreneur plays a very vital role in this sphere (Thornberry, 2006, p.96). The contemplative entrepreneur assesses his own business’s resilience to survive in the long run. 2. The entrepreneurial mind Waight identifies a five factor model to explain the five global factors associated with the entrepreneur’s attachment style (Waight, 2006, p.40). Global Factors and the Big Five Global Factors Five Factor Model FFM Descriptors Extraversion Extraversion Talkative, assertive, energetic Anxiety Emotional stability Calm, not neurotic, not easily upset Tough-mindedness Openness to experience Intellectual, imaginative, independent Independence Agreeableness Good-natured, cooperative, trustful Self control Conscientiousness Orderly, responsible, dependable. Source: www.gu.edu.au The author explores how the entrepreneurial mind responds to global factors that are found in the behavior of the adult individual. 3. Researching the new venture The entrepreneur who researches into the viability of a new venture or business proposition does so with a degree of uncertainty which in turn is associated with risk. He is motivated to undertake new ventures with risk for potential profit acts as a driver or a motive force. Research into new ventures is an essential element in the entrepreneurial culture. Justification for such research is based on the following arguments: A market survey will show if another firm has the ability to capture new market share or if the market is already saturated It enables the entrepreneur to understand the nature of demand for his product, including the price and income elasticities of demand. It also enables him to choose a particular pricing strategy such as market penetration or market skimming pricing. Finally it enables him to assess the existing competitors capacity and ability to prevent a new firm from entering into the market. 4. Building a powerful marketing plan The entrepreneur has to be ready with a marketing plan which is set out in the form of an outline the actions and objectives of marketing. It will be something like the following: 4. 1. Marketing Plan a. Executive summary which sums up the whole plan. b. The outline of the challenge such as what kind of product will be sold fast. c. An evaluation of the situation, e.g. company’s goals, culture, strengths etc. d. A customer evaluation, i.e. customer preferences, concentration, value drivers etc. e. An evaluation of competitors, i.e. market shares, strengths, weaknesses and so on. f. Market segmentation analysis, i.e. consumer demographics and their incomes etc. g. An evaluation of the external environment such as PEST analysis and SWOT analysis. h. The chosen marketing strategy, i.e. how best the marketing mix – price, product, place and promotion – will be utilized to achieve marketing objectives. i. Any alternative strategy, i.e. other than the above total plan is there any other alternative plan or strategy to achieve the same objectives. 5. Crafting a winning business plan The next step in the portfolio is the design of a sound business plan to succeed in competitive environments. A business plan is a formal document which contains strategic business objectives, ways and means to achieve them and essential information for such actions. The following is the outline of a good business plan: 5. 1. Business plan a. The executive summary, i.e. an overview of the industry and so on. b. An evaluation of the market, i.e. studying the target for the company’s product. c. Marketing plan, i.e. a detailed analysis of the company’s marketing plan. d. An evaluation of the operating plan, i.e. a detailed analysis of location, facilities, assets and so on. e. An evaluation of competitors, i.e. strengths, weaknesses, opportunities of rivals etc. f. Financial plan, i.e. the current requirements of funds, their availability and the relative cost of them etc. g. Any additional information such as government rules and regulations in the industry. 6. E-commerce and the entrepreneur E-commerce and the entrepreneur are closely connected in the modern world of business. Whether it is a new business or an existing one, entrepreneurs who wish to increase their revenues must think of the world-wide-web and its potential (Reynolds, 2004, p.273). Selling online has become a very fashionable way of reaching potential customers who cannot be persuaded in any other way. The tech-savvy entrepreneur is unlikely to sit and watch idly while his rivals penetrate far flung markets that are continents away geographically. There is indeed the investment factor. Investment in new technology requires a commitment of big capital. Even the maintenance of equipment and networks needs a highly qualified and trained staff. However once everything is in place, the scale economies would do the rest. It would not cost extra cents to send a cluster of e-mails to potential customers. This target marketing strategy helps the business to grow fast enough (Brown, 2006, p.102). Conclusion The concept of entrepreneurship has acquired hitherto unknown dimensions and they include even philosophical undertones (Kao, Kao and Kao, 2002, p.43) and psychological overtones (Davidson et al, 2006, p.3). Therefore it is desirable for every entrepreneur to focus on these aspects as well. Neuromarketing has been the latest craze among at least some big businesses including Coco Cola Company. As much as marketers worry about how the behavior of neurons in the consumer’s brain have an impact on his decisions, the successful entrepreneur has to think of what the latest research on neuromarketing has accumulated for perusal (Renvoise and Morin, 207, p.172). Finally, the entrepreneurship is what drives growth in the business world. It’s the Schumpeterian dimension that is more appropriate for an in-depth analysis of its many-faceted connotations and denotations. Its nuances are many and varied. REFERENCES 1. Brown, Bruce C, (2006), How to Use the Internet to Advertise, Promote and Market Your Business or Website with Little or No Money, Florida, Atlantic Publishing Group Inc. 2. Davidson, Per et al, (2006), Entrepreneurship and the Growth of Firms, Massachusetts, Edward Elgar Publishing Inc. 3. Donaldson, Lex, (1995), American Anti-Management Theoreies of Organization: A Critique of Paradigm Proliferation (Cambridge Studies in Management), New York, Cambridge University Press. 4. Eggert, Nancy J, (1998), Contemplative Leadership for Entrepreneurial Organizations: Paradigms, Metaphors and Wicked Problems, Connecticut, Quorum Books. 5. Kao, Raymond W, Kao, Kenneth R and Kao Rowland R, ( 2002), Entrepreneurism: A Philosophy and a Sensible Alternative for the Market Economy, London, Imperial College Press. 6. Kukoc, Kruno and Regan, Dominic (2008), Measuring Entrepreneurship, retrieved on August 10, 2008, from www.treasury.gov.au 7. Renvoise, Patrick and Morin, Christophe, (2007), Neuromarketing: Understanding the Buy Button in Your Customer’s Brain, Tennessee, Thomas Nelson Inc. 8. Reynolds, Janice, (2004), The Complete E-commerce Book : Design, Build and Maintain a Successful Web-Based Business, 2nd Edition, San Francisco, CMP Books. 9. Thornberry, Neal, (2006), Lead Like an Entrepreneur, New York, The McGraw-Hill Companies Inc. 10. Waight, Paul I, (2006), Attachment, Anxiety and the Entrepreneurial Mind: The Relationship between Adult Attachment Style and Entrepreneurship, Australian Digital Theses Program, Griffith University, Australia, retrieved on August 10, 2008, from www.gu.edu.au. Read More