The Entrepreneurial Process, Essay Example

Introduction

Entrepreneurs often get their ideas through in-depth experience in markets where they have been exposed to unsatisfied customers’ need.  However, this is often difficult in life-long careers pursued in an educational setting

In order to become successful entrepreneurs, aspirants should first ask themselves if they are comfortable with stretching the rules,  ready to make powerful enemies, have the patience to begin small, the willingness to quickly shift strategies, and the readiness to be a closer

According to Hisrick, Shepherd,& Peter, the process of starting a new venture is what essentially embodies  the entrepreneurial process, and this goes beyond problem solving in any typical managerial position, as it involves the identification of and evaluation of an opportunity, the development of  a business plan, a determination of the required resources, and the  managing of the resulting enterprise, to achieve specific goals and objectives ,which should include meeting customers need, achieving profitability, growth as well as sustainability

Identification and Evaluation of Opportunity Most business opportunities are not easily identified, and as such the identification and evaluation phase of the process is often the [2]most difficult, according to Hisrick et al. (2005). The scenario facing Strauss Zelneck, the CEO and President of BMG Entertainment and Kevin Conroy, the senior Vice-President of Worldwide Marketing and New Technology with the same company, in August 1999 was what face many entrepreneurs in the identification and evaluation phase of the entrepreneurial phase of the process, despite the fact that this company had already been established, because the environment it was operating in was threatening its existence, and a new idea had become a critical imperative.

The global music business industry had entered a tumultuous phase, and BMG Entertainment’s survival had become untenable, as a result of what internet access was now doing. Internet access was now bringing consumers in direct with music online rather than through traditional storefront retailers, and their taste and buying patterns were undergoing drastic changes, which the company was now incapably of measuring and  then be able to develop strategies to address  them

Identifying and evaluating business opportunities becomes a challenge to these two business executives, as they look to develop an approach that should include possible forming alliances, developing unique or niche marketing strategies that has to have  pricing structures that will attract all stakeholders to them.

In order to progress, Zelneck and Conroy, unlike other entrepreneurs, had to develop a formal business mechanism and use it to find the best source of ideas. They will have to consult consumers through marketing surveys, product sampling, conducting research on competitors’ products, distribution channels, market shares, prices and advertising and promotional strategies, to ensure all the vital data are collected to enhance their identification and evaluation system, and allow the right decision to be made.

Developing a Business Plan A Business Plan is the process of writing down what will be involved in bringing a business idea to reality, and this activity should include a description of the business, a market analysis, a competition assessment, marketing plan operations plan, financial plan, and an executive summary to preface the entire project outlining all the fundamentals

In describing the business, prospective entrepreneurs should ensure it embodies a mission statement, which will serve to outline the purpose of the venture, its intentions, motivations, and the guiding principles that will be behind all activities pursued.  A successful business plan that had incorporated an effective mission statement could be seen in the case of Ben and Jerry.

The executives of Ben and Jerry organization wrote that the company will be founded on, and dedicated to a sustainable corporate concept of linked prosperity, and its mission will consist of three inter-related parts, namely product, economic, and social

In terms of products, Ben and Jerry made the case that the company intend to make, distribute and sell the finest natural quality ice cream with euphoric concoctions, and will continue to incorporate wholesome natural ingredients that promotes practices that respects the earth and the environment

Economically, Ben and Jerry effused that their company will operate on a sustainable financial basis, to ensure profitability and growth, which they envision as increasing values for shareholders, expanding opportunities for developments and career growth of its treasured employees, while socially, the company plan to operate in a way that actively recognize the central role that its business will play in society. These roles they infer that they will include innovations that will lead to improvement in the quality of life of the members of the communities it will operate in. Ben and Jerry closed their case by saying that they will strive to integrate all three concepts equally, in ways that will reflect deep respect for individuals within and outside the business, as well deliver community support in all operating locations

It would have also been incumbent on Apple Computer, when it decided to change its name to Apple Inc., after being forced by the competition to develop a new company with different ideals that will be attract even greater number of customers than its rivals  [4]

Apple Inc mission statement has been comprehensive according to Yoffe & Slind  in that Non-PC Products drove much of its financial performance, as products like iPod lone of music players, together with its iTunes Stores upended the music industry.

One and a half year after the change in business plan, Apple Inc. success propelled it beyond its PC business performance, to a $1.07 billion profit, earned from $7.46 billion revenue intake The company was thriving at a degree that was seemingly far beyond its original business capacity.  This was demonstrative of the importance of having a relevant business plan with a mission statement guiding activities.

A press release from Apple Inc. following one of its Board Meetings had truly reflected the mission. The leadership stated that the company was committed to bringing the best personal computing experience to students, educators, creative personnel and consumers around the world, through innovative hardware and software and internet offerings.   This was an offshoot of its founder Steve Jobs, who had famously remarked that man, is the creator of change in the world, and as such should be above systems and structures, and not subordinate to them

The market analysis also plays a significant role in the evolving of the business plan, as it provides vital information on the size, location, history, competitiveness, profitability, and general health, so that prospective entrepreneurs can see that challenges and opportunities

According to Ehmke and Akridge efforts to reach potential customers in a markets and to generate profits will be limited by the forces of suppliers power, new competitors, substitute products, buyer power, industry rivals, and government regulations, which can all combined to negatively impact the progress a new venture can make in an industry, if it is without a market analysis.

Critical to every prospective entrepreneur success is also the profile of the targeted customers, and how they are used in the business plan. In compiling demographic and physiographic data will provide information on the locality, age, sex, income bracket, behavioral characteristics, cultural orientations, industrial needs category, industry leaders, market shares, purchasing decision makers, and financial constraints operable in target specific environments.

In the case of BMG Entertainment Zelneck and Conroy had access to data from the National Association of Recording Merchandisers which could supply percentage gender distribution, and age category sales performance for period 1990 to 1998, so that  forecast can be made of how these consumers will behave.

The company can also examine the performance of competitors like EMI, Sony, Universal, and Warner over the same period and used the rate of growth or decline of their market shares to develop creditable competitor assessment that will fine its marketing strategies against them.

A Competitor Assessment that entrepreneurs conducts before launching the marketing strategy should always consider the market share of their competitors, like the case with BMG Entertainment,  their product prices, market share, advertising and promotional- strategies if available, product features, financial position, reputation, brand strength and the length of time they are in the industry

The case of Leopold Fernandez Pujalis; a former corporate executive with Procter and Gamble and Johnson and Johnson, who decided to set up a pizza company similar to Domino Pizza in Spain, serves here as an excellent model for prospective entrepreneurs to examine the entrepreneurial process  According to Kuemmerle  Pujalis knew little about Pizza or delivering fast foods, let alone how such business will function in Spain, so he decided to start small and gain first-hand experience of the customers, as well as the logistics and economics relevant to the unique industry within a Spanish culture.

As a result of Pujalis decision to be patient and start slow, growth when it came for his company Telepizza, came very fast. The company expanded into six countries, established 600 selling outlets and was earning an annual revenue of $250 million when it was sold to a Spanish conglomerate in 1999

Pujalis may or may not realize what was the significant in his decision to start Telepizza small, and growing it into a multi-million dollar organization, but in effect he was perfecting a marketing plan that involved product offerings, price determination strategies, development of viable distribution networks, and advertising and promotional strategies

In terms of pricing strategies, Ehmke and Akridge postulate that they are based on perceived value of product and services, marketing goals and expected outcomes  Pujalis would have known after his experience and learning curve growth, as well as the sales volume and preferences of customers, what his price levels should be, and what strategies to use to maximize revenues, even as his organization expands into other countries with different culture.

Companies facing situations like Apple Inc. have more difficult challenges, in that lost market shares means significant reductions in revenues and profit and extinction, and will have to conduct analysis on a larger and more scientific basis, using more sophisticated tools to ensure the competitive edge is not lost.

Resource Planning and Requirements   Resource Planning and requirement for new ventures should ensure that those that fall in the critical need categories are differentiated from those that are deemed to be only helpful, but entrepreneurs should ensure requirement needs for specific areas are not underestimated, as this could have serious negative repercussions, especially in terms of meeting customers’ needs at high demand times

The moment Steve Jobs returned to Apple Inc. in August 1997, he instituted from the company’s lost position, an entrepreneurial strategic formula that include a $150 million invest alliance partnership with Microsoft, an extension of Microsoft Office and other software as core products for another five years, and the termination of the McIntosh licensing program, to ensure timely return to profitability by a now more lean and flexible company

In the area of distribution Jobs saw the need to establish retail stores to gain and generate greater market shares, and opened 215 of them in a six year period. The outcome was phenomenal, in that retail sales rose by 19%, and the momentum was maximized by making accessing markets in China, UK, Italy, and Japan, and replicate the same strategy

Entrepreneurs also need the equipment and materials needed to produce the goods that are to be marketed as well as their source, cost and lead times, and how they will be finance   Concerning BMG Entertainment, the company had to ensure records were produced in different global locations, contracts were secured with artist, concerts were promoted, juke boxes were supplied, royalties were dispensed as per contracts, consumers online access were provided, inventory was being managed, and sales monitored to ensure control prevail.

In contrast, the Telepizza owner would seek to ensure its locations can access baking supplies and equipment, verify staff availability, analyze training cost, research compliance standards, check food quality, locate source of delivery vehicles, compare  power supplies with operating requirements and  measure ease in securing license for ensure other stores will become operable within projected timelines.

One of the biggest hurdles some entrepreneurs have to face to get their ventures off the ground is their preparation of financial plans that will impress banks and other lenders of financial capital. The nature of the financial plan depends on the requirements of individual lending institutions,  the operable governmental regulations, attendant  risk factor of the business, the financial position of the entrepreneur or entrepreneurs, the nature of the ventures to be established, as well as the size of the financing required. However, these institutions requirements have to be met before financing are disbursed.

Small venture companies may need to provide simple cash flow analysis, which involve sales forecast, receivables, and payables, cash on hand for a specified number of years, while for larger projects financial institutions may request projections ranging from two to four years, with forecasted incomes, cash flows, and balance sheets as well as breakeven analyses

Managing the Enterprise   The final stage of the entrepreneur process is the managing of the enterprise, after all other requirements are in place and operations had begun in earnest. According to Hirsch et al., this stage requires bringing a specific management style and organizational structure, as well as other critical variables and standards to the venture drive success

Entrepreneurs in some cases due to a lack of managerial competence, recruit such skills into the venture they have created to ensure greater probability of success due to the earlier application of these personnel experience and knowledge to the process.

Growth of these venture swill drive or prevent entrepreneurs to remain as sole proprietors, or form partnerships, limited liability or public companies. Managing however, the examination of each areas of operation to see what are required in terms of staffing, finance, raw material, training, quality control, equipment, customer satisfaction, motivation, new strategies, and other needs and providing them at the appropriate time, to ensure maximum productivity and profit are realized.

Ventures once they start to grow in the management phase, will meet other challenges, especially from changes in technology, the entry of and threat from new products and [7]imitations, and angry as well as dishonest competitors.   These threats may force many to utilize intellectual property laws, and the securing of patents and trademarks to protect their products and services, prevent the tarnishing of their public images, as well to reduce the losses in revenues.  It was the change in technology and the pirating of BMG Entertainment musical records and other products that force Zelneck and Corey to meet, so that they could formulate new strategies to counter these threats.

In this stage Entrepreneur may develop new products and services and failed to follow the required regulations like, product licensing, safety requirements, and compliance to the state and government taxation policies. Failures at this stage may lead to costly legal and other expenses that may threaten the viability of their ventures.

CONCLUSIONS

Knowledge of the Entrepreneurial process is therefore critical to every prospective entrepreneur, in that it provide a guide to the development of the venture from the difficult identification and evaluation of opportunities stage to the point where a business has developed to meet previously unmet customers needs in low or high competitive environment.

The success or failure of each entrepreneur may be indicative of their answers to Walter Kuemmerle question regarding whether they were comfortable in stretching the rules, were patient enough like Pujalis to start small, were willing like Steve Jobs, Zelneck and Conroy to shift strategies quickly, or were excellent closer like the $150 million deal Steve Jobs closed with Microsoft to ensure Apple Inc. remain profitable and competitive.

Finally, every stage of the entrepreneurial process should be utilized by prospective entrepreneurs, and not be avoided or circumnavigated, because it may be in the integration of the different components, like in the case of Ben and Jerry, that synergy and exponential financial success may come to their business in the medium and long term.

Works Cited

1. Harvard Business Review. 2012. Entrepreneurship hbs.edu/entrepreneurship/resources, 03/17/12 Electronic
2. Kuemmerle, Walter. 2002. A Test for the Fainthearted Harvard Business Review Vol.8 Issue No. 5 Print
3. Ehmke, Cole, & Akridge, Jay. 2005. The Elements of a Business Plan First Steps for New Entrepreneurs Agricultural Innovation and Commercial Center Purdue University Purdue Extension www.ces.purdue.edu/extmedia/ec/ec/-735.pdf  03/17/12 Electronic
4. Yoffe, David, B. & Slind, Michael. 2008. Apple Inc. Harvard Business School Publishing Boston MA 704/840 www.hbsp.harvard.edu , 03/18/12 Electronic
5. About.com Retail Industry. 2012. The Mission Statement, Global Vision, and Values of Apple Inc. www.about.com/od/retailbestpractices/ig/company-mission-statement/Apple-Inc-1-mission-statement.htm. 03/17/12 Electronic
6. Hafner, Katie, 2007. Inside Apple Stores, a Certain Aura Enchants the Fruitful New York Times (December 2007) accessed via action Print
7. Hirsch, Robert, D. & Peters, Michael, P. Shepherd, Dean, A. 2000. Entrepreneurship 6^th edition Mc Graw-Hill Irwin New York NY Print
8. Rivkin, Jan, W., Meier, Gerrit. 2000. BMG Entertainment Harvard Business School Publishing (2000) Boston MA Print

 [1] Harvard Business Review. 2012. Entrepreneurship

www.hbs.edu/entrepreneurship/resources, 03/17/12 Electronic

2. Kuemmerle, Walter. 2002. A Test for the Fainthearted Harvard Business Review Vol.8 Issue No. 5 Print

1. Harvard Business Review. 2012. Entrepreneurship
2. hbs.edu/entrepreneurship/resources, 03/17/12 Electronic
3. Rivkin, Jan, W., Meier, Gerrit. 2000. BMG Entertainment Harvard Business School Publishing (2000) Boston MA Print

[3] [3] 3. Ehmke, Cole, & Akridge, Jay. 2005. The Elements of a Business Plan First Steps for New Entrepreneurs   Agricultural Innovation and Commercial Center Purdue University Purdue Extension www.ces.purdue.edu/extmedia/ec/ec/-735.pdf  03/17/12  Electronic

[4] 4. Yoffe, David, B. & Slind, Michael. 2008. Apple Inc. Harvard Business School Publishing Boston MA  704/840 www.hbsp.harvard.edu,  03/18/12 Electronic

[5] 5. About.com Retail Industry. 2012. The Mission Statement, Global Vision, and Values of Apple Inc. www.about.com/od/retailbestpractices/ig/company-mission-statement/Apple-Inc-1-mission-statement.htm. 03/17/12  Electronic

Hirsch, Robert, D. & Peters, Michael, P. Shepherd, Dean, A. 2000. Entrepreneurship 6^th edition Mc Graw-Hill Irwin New York NY Print

Yoffe, David, B. & Slind, Michael. 2008. Apple Inc. Harvard Business School Publishing Boston MA 704/840 www.hbsp.harvard.edu , 03/18/12 Electronic

[7]7.  Hirsch, Robert, D. & Peters, Michael, P. Shepherd, Dean, A. 2000. Entrepreneurship 6^th edition Mc Graw-Hill Irwin New York NY Print