Entrepreneurship & Small in Business

ASSESSMENT SUBMISSION & DECLARATION
QUALIFICATION UNIT NUMBER AND TITLE
PEARSON BTEC HIGHER NATIONAL DIPLOMA IN BUSINESS (RQF) 09. ENTREPRENEURSHIP & SMALL BUSINESS MANAGEMENT (LEVEL 4)
STUDENT NAME MUHAMMAD BILAL MAJEED ASSESSOR NAME SIR AQEEL
DATE ISSUED COMPLETION DATE SUBMITTED ON
21ST DECEMBER, 2018
ASSIGNMENT TITLE THE FIRST OF ITS KIND ENTREPRENEURIAL VENTURE
ASSESSMENT CRITERIA TASK NUMBER EVIDENCE PAGE NUMBER
PASS 1 TASK 1 PAGE 1 TO 7
PASS 2 TASK 1 PAGE 1 TO 7
PASS 3 TASK 3 PAGE 10 TO 11
PASS 4 TASK 3 PAGE 10 TO 11
PASS 5 TASK 2 PAGE 8 TO 10
PASS 6 TASK 2 PAGE 8 TO 10
PASS 7 TASK 2 PAGE 8 TO 10
MERIT 1 TASK 1 PAGE 1 TO 7
MERIT 2 TASK 3 PAGE 10 TO 11
MERIT 3 TASK 2 PAGE 8 TO 10
MERIT 4 TASK 2 PAGE 8 TO 10
DISTINCTION 1 TASK 1 PAGE 1 TO 7
DISTINCTION 2 TASK 3 PAGE 10 TO 11
DISTINCTION 3 TASK 2 PAGE 8 TO 10
DISTINCTION 4 TASK 2 PAGE 8 TO 10
PLAGIARISM
Plagiarism is a particular form of cheating. Plagiarism must be avoided at all costs and students who break the rules, however
innocently, may be penalised. It is your responsibility to ensure that you understand correct referencing practices. As a
university level student, you are expected to use appropriate references throughout and keep carefully detailed notes of all
your sources of materials for material you have used in your work, including any material downloaded from the Internet.
LEARNER DECLARATION
I CERTIFY THAT THE ASSIGNMENT SUBMISSION IS ENTIRELY MY OWN WORK AND I FULLY UNDERSTAND THE CONSEQUENCES OF PLAGIARISM. I
UNDERSTAND THAT MAKING A FALSE DECLARATION IS A FORM OF MALPRACTICE.
STUDENT SIGNATURE: [e-mail] DATE: 21ST DECEMBER, 2018
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TASK (1)
ENTREPRENEURSHIP
The ability and willingness to develop, organize and manage a business venture along with any of its
risks in order to make a profit. (WebFinance Inc., 2018)
The most evident examples of entrepreneurship is the starting of new businesses and offering new
products and services in a new market/region. Careem, Uber & Snapchat are some of the examples of
successful entrepreneurial ventures in recent years.
The people who start these entrepreneurial ventures are called entrepreneurs. An entrepreneur sees an
idea for a startup business, does some type of market research, takes risk and avails that opportunity.
The risks taken can be financial or psychological. People become entrepreneurs and open startup firms
to pursue their own ideas, to be their own boss and realize financial rewards. Entrepreneurs are further
divided into three main types which are discussed below.
Serial entrepreneurs are the kinds of entrepreneurs who have a lot of ideas for new startup businesses.
They start an entrepreneurial venture and when it matures then give the managing powers to another
person and start working on new business ideas. They usually do ventures in diversified fields. These
kind of people love starting new ventures and making them successful.
Travis Kalanick can be an example of serial entrepreneur. He co-founded Uber ( 70 Billion dollars
company ) Scour, a peer to peer file sharing application, Red Swoosh, a peer-to-peer content delivery
network. (FORBES MEDIA LLC, 2013)
Intrapreneur is a person who starts an entrepreneurial venture and then does the expansion of that one
idea by bringing innovative changes to it and makes it more effective and profitable. Last type of
entrepreneur is owner-manager entrepreneurs who create the startups and also manage them. They
focus on stability rather than growth.
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TYPES OF ENTREPRENEURSHIP
Entrepreneurships can be categorized into different categories according to their size; for this purpose,
different benchmarks may be used, but the most common is number of people employed. Small and
medium-sized enterprises (SMEs) employs 50-200 people. SMEs are further subdivided into micro
enterprises which hires less than 50 employees. Medium-sized enterprises employs 200 to 700
employees. Large enterprises employs 700 or more people.
A business is also categorized on the basis of ownership which are Proprietorship, Partnership and
Corporation. A proprietorship is owned by one individual. More than 70% of the businesses in the
United States are organized as proprietorships. The advantage of this form of business is the ease and
low cost of doing business. The primary disadvantage of proprietorships is that the monetary funds
available are limited to the individual owner’s resources. Small local shops such as grocery stores,
hardware stores, repair shops, laundries and restaurants are often organized as proprietorships. As a
business matures and requires more financial and administrative resources, it may become a
partnership. A partnership is owned by two or more individuals. About 10% of the businesses in the
United States are organized as partnerships. A partnership may also enlarge its ability to finance its
operations. As a result, it may become a corporation. A corporation is organized under state or federal
statutes as a separate legal body. The ownership of a corporation is divided into shares of stock. A
corporation issues the stock to individuals or other businesses, who then become owners or
stockholders of the corporation. A primary advantage of the corporate form is the ability to obtain
heavy resources by issuing shares of stock. (Warren, 2007)
Another type of classification is for profit businesses and non-profit organizations. For profit businesses
aim is to make more money than its total expenses. They have to pay taxes on the bases of their income.
Non-profit organization concentrate on helping the general public and the profit earned is reinvested in
the business. Non-profits are usually exempted from taxes.
Another classification of businesses is public sector business and private sector business. Public sector
businesses are run by the government and often provide services like railway or bus services. Their
business goals can see deviations due to electoral politics due to different interest groups and political
parties in the government. Plan9 is Punjab government’s Information Technology Board’s tech incubator
established with aim to kick-starting the entrepreneurial ecosystem in Pakistan. Founded in August
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2012, the pioneer of incubation in Pakistan is striving every day to mentor new, tech-product based
startups of Pakistan. (PITB, 2018)
Pakistan international airlines (PIA) is also an example of government owned enterprise. In 2000’s
despite being the largest operative on Pakistan’s international and domestic routes, the carrier is
increasingly losing its market share due to the mismanagement, corruption and nepotism. PIA has
become a “White Elephant” as its operating costs are much higher than its revenues.
The private sector business is run by individuals and companies with an aim of making profit. Lyft,
Airbnb and Uber are some examples of private sector entrepreneurship. Their business objective is to
capture market share and become market leader eventually. Hence they focus their resources on
achieving them unlike public sector where there are a lot of bureaucratic hindrances.
There are some complexities which occur in different business structures which create problems for a
company to get things done efficiently. A large scale company usually has a hierarchical structure
divided into departments with each department having a head manager leading that department which
reports to senior executives in the company. Complexities arise because each department almost works
autonomously which results in communication barriers. Small and medium sized enterprises usually
have “Organic structures” also known as “flat" structures. Decentralized decision making and loose
departmentalization are its main features. It is a less formal structure than hierarchal one. Role
duplication and unclear role definition are one of most usual of the problems. It also becomes difficult to
hold someone accountable in this type of structure.
In the age of information technology where the world has become a global village, businesses have to
adapt themselves and take steps to integrate its different business functions to share information to
succeed in the market and increase efficiency. Interrelationship between different organizational
functions is very much important. Sales projection cannot be met if sales department loses business
because the manufacturing department was unaware of an increase in product demand resulting in
revenue loss. Also marketing department cannot promote the products efficiently if they aren’t briefed
properly about it. Finance department must also coordinate with other departments like marketing
department to allocate budget for marketing campaigns.
IMPORTANCE OF ENTREPRENEURSHIP
Entrepreneurship’s importance was first articulated in 1934 by Joseph Schumpeter. In his book
The Theory of Economic Development, Schumpeter argued that entrepreneurs develop new
products and technologies that over time make current products and technologies outdated.
Schumpeter called this process creative destruction. Because new products and technologies
are typically better than those they replace which in result increases consumer demand.
(Schumpeter, n.d.)
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These agents of change bring creativity to what is currently available. The process of creative
destruction is not limited to new products and technologies; it can include new pricing
strategies (e.g., Netflix in DVDs), new distribution channels (such as e-books for books), or new
retail formats such as IKEA in furniture. (Duane, 2012)
COMPANY PORTFOLIO:
Established in the year 1985, Wood Solutions are well-known manufacturers of doors, kitchens,
wardrobes and furniture. With state of the art manufacturing units in Karachi and Islamabad,
we endeavor to cater market base throughout Pakistan.
INTRODUCTION:
Starting from humble beginnings, Mr. Aun Ali and his son Mr. Idrees explored into the business of wood
imports and started a company by the name of “Badri traders” in Karachi, Pakistan. The office is located
in Old Haji camp from where the business of wholesale distribution of bulk wood logs imported from
abroad is sold in markets all over Pakistan. The wood is imported from two main countries which are
Canada and America. Ash wood, meranti, golden teak wood and Burmese teak wood logs are generally
imported. Imported wood is then transferred to their factory unit located on Chak beli road, Islamabad.
This is the place of assembly operation where customized furniture manufacturing process takes place
(Source, survey).
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PRODUCTS:
DOORS KITCHEN WARDROBES FURNITURE
Solid wood Laminated Solid Beds
Semi solid Engineered Semi solid Sofas
Engineered Solid wood Engineered Dining tables
Hydraulically pressed PVC coated Chipboard lamination Office chairs & tables
Commercial flush UV Coated high gloss PVC coated Children furniture
SIMILARITIES & DIFFERENCES WITH OTHER SET-UPs:
Home Twenty One & Interwood Mobel (Pvt.) Ltd are its main competitors. Similarities between them
are that all are located in same vicinity have same range of products. All are private sector businesses.
Home twenty one is a small sized enterprise having two showrooms in Islamabad while Interwood is a
large scale business having 12 different shops in Lahore, Karachi, Sialkot and Rawalpindi/Islamabad.
They also have authorized dealers for their different products range. (Interwood Mobel (Pvt.) Ltd, 2018)
The main differences and edge Wood solution has over its competitors is that it uses German polishing
units which are compressor machines which can sander and polish the wood neatly. There is also a huge
pricing difference between them. As wood solutions imports its own wood and has its own
manufacturing unit, they have made significant cuts in their cost of production of a single product. They
also do carvings using CNC machines as per the drawings made on computer software.
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POTENTIAL IN PAKISTAN FOR ENTREPRENURIAL VENTURES
Pakistan is developing country with great potential for entrepreneurial ventures. Both the factors
favorable and non-favorable factors are discussed of stating entrepreneurial ventures in Pakistan. With a
population of more than 200 million, demand of products and services is exponentially more than its
supply. For example in Pakistan’s education sector, public sector schools are few and far way. Their
quality of education is also below par. Private sector schools and academies are giving tuition in morning
and evening also. Students from rural areas come to urban areas schools and colleges to study with a
travelling time of more than one to two hours on average. Another potential example which I’ll discuss
here is healthcare system of Pakistan. It is also confronted with scarcity of healthcare facilities,
insufficient and untrained human resource. Hence the potential is vast in all sectors.
There is also potential for startups in Pakistan because there is lack of quality products and services. Any
venture which brings quality and efficiency into Pakistan’s market has good chances of becoming
successful. Factors of production in Pakistan are in abundance. For example land, labor and capital.
Now I’ll discuss the factors not suitable for entrepreneurial venture in Pakistan. There is no ease of doing
business in Pakistan. From registering a company till the end process, there are many bureaucratic
hurdles along the way. There is corruption in every department of government. Energy crises is also one
of the important factor. Minimum of 8 hours of load shedding for domestic users and 10-12 hours load
shedding is done for industries. This factor has caused a lot of established foreign business to move their
investments out of the country and into neighboring countries. Another disadvantage is of Lack of
technical labor. Pakistan’s education system is plagued by rote learning and very little concept learning
and technical skills.
UNSUCCESSFUL BUSINESSES IN PAKISTAN
A lot of startup businesses fail because of wrong business models, product or service not customer
focused, price too high and many more. Some examples are given below:
Automated car wash business got failed in Pakistan’s market due to various factors. Some factors were
high price and not enough marketing. Techno wash in Rawalpindi is an example of such business.
Chips brand by the name of “Oye Hoye” by united snacks got also failed due to demand and supply
issues. Another failed business is “Lootmaar.com” an auction website. It failed because there was no
trend of online auction in Pakistan’s market. They couldn’t create a trend for it by doing marketing.
Successful Businesses in Pakistan
Uber and Careem, both transportation network companies are very successful startups operating in
Pakistan. They have brought innovation and easiness with them. Taxi mafia got eliminated which had its
own fares and were totally biased to customers/riders. These applications provide a platform to connect
drivers with customers/riders and calculate the ride fare in real time depending upon number of factors.
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Pakwheels is also an important success story of Pakistan in the field of entrepreneurship. It is also an
online platform for car buyers and sellers in Pakistan. It also provides its users to read cars reviews and
news, check their prices and find solutions to all of their automotive needs. (PakWheels (Pvt) Ltd, 2018)
Zameen.com is the largest property portal in Pakistan. It was founded in 2006 and has since
revolutionized the real estate industry of Pakistan by connecting buyers and sellers online in a highly
convenient way. (Zameen.com, 2018)
Daraz.pk is Pakistan’s biggest online shopping website application. A wide range of goods and products
are offered by Daraz.pk from electronics to books, cosmetics to toys etc. The website also offers a easy
delivery, payment and insurance system.
TASK (2)
SKILLS & CHARACTERISTICS OF ENTREPRENEURS
Many skills and characteristics have been described about entrepreneurs but some of them which are
common in all successful entrepreneurs are discussed in the upcoming lines. An entrepreneur can only
be successful in the long run if he has a passion for the business. This passion arises when the
entrepreneur knows that the business will positively influence people’s lives. Perseverance and
persistence are the products of passion which are great attributes in hard and difficult times. Products
and customers are two important elements of a business. Hence an entrepreneur must be
product/customer focused person and not on profit or gains. No department can make any difference if
a business doesn’t have good products along with satisfied customers. This characteristics also includes
the ability to spot for product opportunities in the market or the lack of it.
An ancient Chinese saying warns, “To open a business is very easy; to keep it open is very difficult.” An
entrepreneur must have the execution intelligence to run the business in the long run. Execution
intelligence means to execute a business idea, manage the daily affairs of the company and getting solid
results. An entrepreneur must be a risk taker in terms of doing investments and also in making day to
day decisions. (Duane, 2012)
Now we will do a brief comparison of entrepreneur and managers in terms of their skills and
characteristics. The characteristics of entrepreneurs which are same as that of managers will be
discussed first. Strong business ethics is one of the quality same in both of them. Reputation is an
important asset of the company. It takes years to build a good strong reputation while very much less
time in losing it. Time management skills can also be same to entrepreneur and manager. These skills
are important so that company goals can be achieved on timely basis without getting distracting.
Skills and characteristics of entrepreneurs different from managers which may or may not be present in
managers will be discussed now. An entrepreneur must be creative which may not important for a
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manager. He must have innovative ideas and unique solutions for the problems which may arise in
running a business. Entrepreneur must be good planner and have a long term vision as to what he wants
to achieve in next five to ten years. Without long term planning from the entrepreneur, business
objectives cannot be achieved. Also quality standard products and services cannot be given without pre
planning. Entrepreneur must have interpersonal skills to communicate his vision to his employees and
close important business deals and networking with his industry colleagues and general public.
The selected entrepreneurial venture “Wood Solutions” became successful due to the leadership skills
provided by his owner. Being done his undergraduate studies in interior designing from Kuala Lumpur,
Malaysia. He had the knowledge and expertise in that field. He can judge the psyche of the customer
and plan accordingly about the type of furniture the customer wants or needs. Having educational
knowledge about this field, he deals the customers with confidence. They have maintained good quality
standards and give warranties on their furniture items which resultantly gives them customer loyalty. All
this have been achieved because the entrepreneur has strong business ethics and never compromises
on quality. For example if the customer has asked them for making doors of solid woods, they won’t use
anything like veneer sheets used in the furniture market for making doors but marketed as solid wood
doors which is a fraudulent practice in furniture market to make extra profits. The entrepreneur has also
strong time management skills. He usually takes furniture orders and delivers them in under one month
time unlike other furniture shops which take orders without any planning and then delay the deliveries
by several months after taking the down payment in advance. These were some of the characteristics of
my chosen entrepreneurial venture which makes him successful in the furniture market of Islamabad.
ASPECTS OF ENTREPRENEURIAL PERSONALITY REFLECTING ENTREPRENEURIAL MINDSET
Every human being has certain personality traits. We will discuss what aspects of these traits motivate
them and their other colleagues to work. Generally people get motivated to a cause due to money, fame
or solving social issues. Risk-takers entrepreneurs aren’t afraid to try doing business in new markets
unlike large sized corporations. Good planners think ahead and are mindful of deadlines. They set their
goals and motivate themselves and others to achieve them no matter what the difficulties they have to
face. Entrepreneurs who are creative are more open to new ideas and always remain curious to gain
knowledge. For example Jack Ma, a visionary entrepreneur, is the founder of “Alibaba” which is a
wholesale ecommerce site. Despite its tremendous growth in China, it is facing problems outside China.
Complaints about counterfeit or fake items sold on the site is one of them. But Ma believes in his
company's vision and in the culture he has created. Hence Alibaba has attempted to position itself as a
website application other businesses use as a platform for wholesale stock.
My selected entrepreneurial venture firm “Wood Solutions” aims to export furniture products in Middle
East and South East Asia. According to the owner of the company, if they maintain the quality of
products and increase sales on monthly basis, then the time will come to expand their operations in
other countries. This shows the resilient behavior and mindset of the entrepreneur to make his business
a success story. It will resultantly keep him and his employees motivated to work vigorously for the
envisioned goal.
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LINES OF ARGUMENTS TO ENTRPRENERIAL CHARACTERISTICS
Entrepreneurs are born, not made. This myth is one of the most common about entrepreneurs but the
fact is everyone can become an entrepreneur by doing training and experience. Entrepreneurs aren't
genetically different from other people however there are some inner qualities like risk taking which is
an inborn trait.
Entrepreneurs are gamblers and greedy. Another argument about entrepreneurs is that they are
gamblers and do it for the money but the fact is entrepreneurs have jobs that are less structured, so
they face uncertain set of possibilities. They have a strong need to achieve and set challenging goals.
Hence they work day and night to achieve them.
BACKGROUND & EXPERIENCE IMPACT ON FOSTERING ENTREPRENEURSHIP
Family background in business can affect the younger generation in a positive and negative way. First I’ll
discuss the advantages. When children see their parents as being innovative, problem solver and free of
corporate hassle, they feel the urge to do the same as their parents. The entrepreneurial behavior
process starts early in their life by socializing in home about the business, gaining business skills and
living through family experiences before even starting their own business. Entrepreneur who has no
family background will take years to gain that experience. If any problem arises in the business family,
one can consult family members and get help from them quickly and efficiently. The negative impact of
this is that in family background business, there is a lack of innovation and flexibility. Entrepreneur won’t
be able to experiment much in the business. Experience always plays a positive impact on fostering
entrepreneurships. You start a new business, it fails due to one reason or another, you get experience
and don’t repeat those mistakes again. Knowledge and insights gained by experience will give the
entrepreneur a competitive over his competitors.
Pappasallis is an Italian restaurant in Islamabad. It specializes in Italian cuisine. It’s a family run business.
Now the managing role has been transferred to the new generation. The experience from previous
generation will be beneficial for the new generation to operate on daily basis.
TASK (3)
Economic Impact of Entrepreneurial Firms
Entrepreneurial firms are small businesses when they start their operations in the market. Small
businesses are the creators of most new jobs. Small businesses are rightfully acknowledged for this. The
statistics show that new firms add an average of 3 million jobs to the U.S. economy during their first
year, while older large scale companies lose 1 million jobs annually. (Kauffman Foundation, 2010)
These firms also pay taxes to the government which is good for the country’s economy. Also the burden
gets less on the government to pay social security as employment rate goes down in the country.
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Many small entrepreneurial startups have built their entire business models around manufacturing
products and services that help larger firms be more effective. The process is also known as outsourcing.
Some examples are mobile phones, laptops and improved prescription drugs resulting in a positive
impact on the effectiveness of large sized firms. Also small biotechnology firms and large drug
companies partner with each other to bring medicinal products to market. (Duane, 2012)
The inventions by entrepreneurs have a positive impact on growth of social economy. All the new
products and services that improve our healthcare sector and education sector are playing a positive
role. An example of entrepreneurship I want to quote here is of a mobile application by the name
“RIZQ” which envisions to eliminate the food wastage problem in Pakistan by partnering up with
restaurants and then recovering daily excess food from these food outlets and delivering them in slum
areas of Lahore, Pakistan.
MACRO AND MICRO FACTORS IMPACT ON BUSINESS OBJECTIVES
Macro factors are external factors affecting the business organization. Economic factors of a country are
very important for an organization. Inflation and interest rates are the factors that directly influence an
organization. Cost structure of products/services have to evaluate according to these factors for
meeting business objectives. Every country or society has some social taboos like in Pakistan rarely
anybody talks about breast cancer among women, use of essential oils as a cure for various illnesses.
These factors are known as socio cultural factors. Organizations must watch the technology aspects
closely and adapt in order to keep up the organization up to date. This factor is known as technological
factor. Environmental concerns like solid wastage disposal and air pollution have to be considered,
which makes the ecological force a crucial factor to consider. Failure to follow new laws and legal
procedures could lead to ban by government. Hence legal factors must be kept in mind while writing
plans to achieve business objectives. (CLAESSENS, 2015)
Micro factors are the factors which have immediate effect on the business like customers, suppliers,
competitors etc. Suppliers provide the company with raw materials, components etc. Organization must
have different suppliers and communicate with them regularly to check on supplier’s attitude and
financial health. Customers are buyers of your product or service. Business must have a robust
customer’s support action plan to make them satisfied and happy. Competitors who produce or give
same range of products/services. Companies must make different kinds of selling strategies to promote
their products.
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Bibliography
Entrepreneurship Successfully Launching New Ventures2012 Pearson Education, Inc
Entrepreneurship Successfully Launching New Ventures2012 Pearson Education, Inc
Financial Accounting2007Thomson Learning Academic Resource Center
FORBES MEDIA LLC2013
Interwood Mobel (Pvt.) Ltd2018
Kauffman Foundation2010The Importance of Startups in Job Creation and Job Destruction
Marketing Insider2015
PakWheels (Pvt) Ltd2018PakWheels.com
PITB2018PLAN 9
Theory of Economic DevelopmentHarvard University Press
WebFinance Inc.2018businessdictionary.com
Zameen.com2018
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