Exploring Entrepreneurship & Small Business Management: Types, Rewards, and Risks | Mark Spagnol

2022
Undergraduate diploma in business management
mark spagnol – 305693m – submission date: 05/12/2022

United 1 – Entrepreneurship & Small Business Management Mark Spagnol
Table of Contents
LO1: Examine the similarities and differences between the different types of entrepreneurial ventures
and the rewards and risks of engaging in entrepreneurial activity..............................................................2
P1: Determine the differences and similarities between the different types of entrepreneurial
ventures. Include Examples....................................................................................................................2
P2: Examine the reward and risks of engaging in entrepreneurial activity..............................................4
M1: Investigate how entrepreneurial risks can be addressed/ mitigated...............................................5
LO2: Explore the key traits of Entrepreneurs and the situational factors that foster or hinder the
entrepreneurial mindset.............................................................................................................................6
P3: Explain the skills, traits and characteristics associated with an entrepreneurial mindset.................6
P4: Examine the situational factors that foster or hinder entrepreneurial mindset................................7
M2: Evaluate the impact of diverse cultural backgrounds on entrepreneurial mindsets........................8
D1: Critically examine through research the difficulties, challenges and limitations experienced by
young entrepreneurs aiming to translate creative ideas into a successful business model....................9
LO3: Assess the impact of Small and Medium Enterprises (SMEs) on the economy.................................10
P5: Interpret relevant data and statistics to investigate how SMEs impact the economy at different
levels......................................................................................................................................................10
M3: Examine the difference between micro, small and medium enterprises. Provide examples of each
and examine how each contributes to economic activity within the local scenario..............................11
D2: Produce a comprehensive motivational strategy that effectively addresses all variables of
motivation to enhance organizational performance.............................................................................12
LO4: Examine the increasing importance of public/ corporate intrapreneurship and the social enterprise.
..................................................................................................................................................................13
P6: Discuss by providing examples the importance of public and corporate intrapreneurship.............13
M4: Identify two real-life examples of Social Entrepreneurship and critically examine how they added
value to society......................................................................................................................................14
D3: Critically examine, using examples from the industry the importance of Corporate Social
Responsibility in the private sector.......................................................................................................15
Bibliography...............................................................................................................................................16
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United 1 – Entrepreneurship & Small Business Management Mark Spagnol
LO1: Examine the similarities and differences
between the different types of entrepreneurial
ventures and the rewards and risks of engaging in
entrepreneurial activity
P1: Determine the differences and similarities between the
different types of entrepreneurial ventures. Include Examples
Entrepreneurship is the venture of setting up a business with hope of maximizing profit. The three
Entrepreneurial ventures are Corporate, Public and Social Entrepreneurship. The Entrepreneurship
Handbook Editorial Team (2014) stated that Entrepreneurship is the development and management of a
business venture to gain profits, and this comes with several risks. On the other hand, Stanford
University (n.d.) also added that Entrepreneurship symbolizes an individual or small group of partners
that seek high innovation to evolve the risk venture embarked. To further add on Entrepreneurship,
Mitzkus (2022) added that Entrepreneurs must be able to motivate, lead, manage, plan, and take crucial
decisions. Innovation and Entrepreneurship do not have the same meaning; however, each
entrepreneurial venture is linked by innovation. Harbison (1956, pp. 364 - 365) argues that
Entrepreneurship is not an innovation, but an entrepreneur is someone who holds the necessary
expertise to establish an organization and make use of ideas from different innovators for the best of
the company.
Social Entrepreneurial ventures adopt certain business models that allow them to generate profits
whilst contributing to society simultaneously. A perfect example is Jacob’s Brew, Malta’s very own first
Social Enterprise. The framework of this business model is to run a cafeteria, attain profit and donate a
percentage of the revenue to a particular NGO. By time, the company started contributing to society in
different ways (Jacob's Brew Team, 2020).
On Corporate Entrepreneurship, Guth and Ginsberg (1990 cited in Hisrich & Kearney, 2011) stated:
‘Corporate Entrepreneurship encompasses two major phenomena: new venture creation within existing
organizations and the transformation of organizations through strategic renewal.’. Xerox is considered
as a Corporate Entrepreneurship, as it started its venture in 1906, producing and selling photographic
paper, by time, Xerox acquired Global Imaging, thus allowing them to distribute office equipment. In
2010, Xerox invested in another company, Spur Information Solutions, which offer software solutions for
parking enforcements.
Entrepreneurs partaking in Public Entrepreneurship take risks to develop ideas and innovations in the
public sector, thus allowing them to make changes within an organization or else initiate new
organizations related to the public sector, with the aim to be used by people who either make use or
else work in the sector itself (Fohim, 2019).
An entrepreneur can either be a Serial Entrepreneur, or an Owner Manager. Both roles consist of
advantages and disadvantages. Serial Entrepreneurs continuously seek innovation as they often
generate new ideas to establish an entrepreneurial venture. Once a business is established, control over
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United 1 – Entrepreneurship & Small Business Management Mark Spagnol
the company is handed over to another person and this would allow a serial entrepreneur to work on a
new idea. In relation to the advantages and disadvantages of a Serial Entrepreneur, Khan (2022)
explained that the advantages are increased opportunities, increasing earning potential and
productivity, greater life control and stronger partnership networks. On the contrary, the disadvantages
of a serial entrepreneur are business goals uncertainty due to the higher risks, less resting times which
might eventually lead to burnout, greater stress levels and decreased change of financial security
because of higher risks.
Owner Managers who both own and manage can be solo, partnered up or else run with other members
of the families. Bill Gates found, owned, managed, and worked at Microsoft which eventually
revolutionized the Information Technology market (Kindersley, 2020).
On the term of Serial Entrepreneur, Henricks (2022) explained that Serial Entrepreneurs are constantly
seeking innovation by focusing on a new business venture with the aim to succeed or generate profit.
Responsibility of the management of day-to-day operations is usually delegated to other people in the
company. Serial Entrepreneurs are challenge worthy because that they are willing to take another risk
after a successful venture. One of the most effective examples of a Serial Entrepreneur is Steve Jobs.
Steve Jobs founded Apple Inc. along with Steve Wozniak back on April 1st, 1976. NeXT Computers was
found by Steve Jobs himself after being terminated employment from his own co-founded company
Apple, alongside with that Steve also acquired Pixar to farther its growth. Steve Jobs was eventually
brought back to Apple in 1997 and aided the company to become one of the most renowned companies
today by being innovative (Seth, 2022).
Elon Musk is another example of a Serial Entrepreneur. Before becoming one of the richest man, Elon
had the idea to design video games. The idea was processed into a vision and Elon designed his first
video game at the age of 12. Gradually, Elon commenced into entrepreneurship and founded renowned
companies like Tesla, SpaceX and PayPal which all revolutionized the respective industry (Althoff, 2021,
pp. 189-190).
To conclude, one may note that all Entrepreneurial activities requires various risks to be taken, thus
forcing an entrepreneur to go out of his own comfort zone. Innovation is the number one key for
potential growth and establishment.
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United 1 – Entrepreneurship & Small Business Management Mark Spagnol
P2: Examine the reward and risks of engaging in
entrepreneurial activity.
Entrepreneurship end goals differ, however one of them is to make enough profit for it to have been
worth the time investing. Accomplishing high rewards requires taking higher risks. Various risks must be
faced during an entrepreneurial venture, and these are classified in two types; Risks that are faced and
risks that must be taken.
Unsystematic risks can be avoided or at least diminished by applying certain changes. Emott (2011)
explained that examples of unsystematic risks are Labor Dissatisfaction, Cash Flow Generation,
Customer Base. On the other hand, Chen (2021) elaborated that Unsystematic Risks are categorized into
five, which are Business, Financial, Operational, Strategic and Legal and Regulatory Risks. Chen (2022)
wrote that systematic risks are inevitable and cannot be diminished through diversification. Categories
of this risk are Interest-Rate Risk, where the market goes through a rise in the rate, market risk,
eventually leading up to a drop in the stock market, exchange rate risk and political risk (Gupta, 2020).
Risks are a burden on entrepreneurs, such as sacrificing a paycheck which leads to no guarantee of a
paycheck when engaging in entrepreneurship. The dependency on personal capital is frightening as an
entrepreneur would have to fund the activity from his personal funds, as no external funds are available.
Physical and mental wellbeing is also a risk, considering that an entrepreneur is expected to work far
more than the normal working hours. Such risks have the high possibility of stressing out an individual,
and this could lead into discouragement (Pennam, 2015).
With higher risks, comes higher rewards, and an entrepreneurial reward can be extraordinary. The
benefits could also be great if proved to be successful. On the topic of different benefits and rewards
Belinda, et al. (2007, pp. 314-320) analyzed that benefits and rewards might differ from one
entrepreneurial venture to another, based on information from other resources. Rewards do not have
to be necessarily related to wealth and profit margins. In relation to rewards, Connor (2021) stated:
‘Unlike traditional work, where effort and input are paid for and rewarded, entrepreneurship rewards
value that is created for people who need it. If you create a lot of value, you can be successful. If you
aren't creating value, you will not be.’.
Entrepreneurs are expected to be key decision makers in business growth, and this pushes them to
develop leadership and managerial skills that stay with them forever, proving to be helpful in future
growth. Managerial skills allow an individual to have better control of the company and the decisions
taken (First Republic Bank, 2022). Accomplishment, pride, and satisfaction are immaterial rewards that
are gained from an entrepreneurial venture. Wheeler (2022) explained that problem solving is nurtured
in an entrepreneur and it is found to be satisfactory when an entrepreneur’s hard work reaches the
targeted audience to solve problems. The ability to run a successful idea means that an entrepreneur
will enjoy a rewarding career as the individual is able to create an ideal job that would fit his desires.
Freedom is also one of the major rewards. The entrepreneur must make key decisions to run and
manage an entrepreneurial venture.
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United 1 – Entrepreneurship & Small Business Management Mark Spagnol
An entrepreneur can’t refrain from risks and risk-taking, and it is important to go through anything that
might hinder growth. With patience, good strategy, and great management, risks can be turned into
rewards that are tangible such as profit return, and intangible rewards that entrepreneurs mostly seek.
A Market Share analysis done by Finances Online proved that most entrepreneurs start their own
business to either be in control, or else to pursue a passion (Jay, 2022).
M1: Investigate how entrepreneurial risks can be addressed/
mitigated.
Entrepreneurial risks vary from Environmental risks, Strategic Risks, Technology Risk or even Market
Risk. It is of the upmost importance to plan out certain processes to mitigate list or have a plan in action
to address a risk once it happens.
Evaluating a country’s policies and stability is important to avoid Environmental, Political and Economic
risks. Although each country comes with its risks, the threat from one country to another varies. Political
changes and instability in the country could affect the investment return and political and country
instability can be caused from terrorism, civil disturbances, wars, guerilla warfare and such (Hisrich, et
al., 2008, p. 92).
Further examples researched recently (Blunden & Thirwell, 2022, pp. Part 1, Chapter 1) of
Environmental Risks are the tragedies that occurred in 2005 and 2010, impacting New Orleans and Haiti
respectively. An environmental disaster such as Hurricane Katrina had caused over 1800 deaths, flooded
the majority of New Orleans causing $80 Billion in property damages and $150 Billion in economic
damage. The company Oxfam was still suffering from natural disaster repercussion 8 years after Haiti
earthquake disaster. The UK Government threatened that it will reduce the funding to Oxfam,
eventually leading to 7000 donors abandoning the company. Oxfam is a British charitable organization
focusing to end poverty. Such natural disasters might hinder the growth, potential and income return of
an entrepreneurial venture. Strategy selection is about making the right choices after planning-ahead to
try and minimize such risks.
Protecting intellectual property is also of the upmost importance and entrepreneurs must do everything
within their power to protect it. Protection can be enhanced by doing patents, copyrights, trademark or
even franchising. Certain protections expire after time; however, the trademark remains forever
(Kenton, 2022). Between 2001 and 2005, the U.S Patent and Trademark Office reported a 50% growth-
rate in applications, thus meaning that companies are understanding even more the need for and
importance of protecting property (Bouchoux, 2006). In 2009 itself, the United States Patent and
Trademark Office issued 167,350 patents (Kumar, 2013).
The Trademark is one way to safeguard a product forever by protecting elements such as the brand and
product name, the logos and colors, shapes, sounds and even scents (National Investors Hall of Fame,
2020). By using Trademarks, McDonalds managed to win 3 major cases in United Kingdom, Australia,
and South Africa. In the United Kingdom, a Indian Foods restaurants marketed their restaurants as
McIndians, and McDonalds had succeeded in the legal case and the Indian restaurants refrained from
selling their products which resembled McDonald’s menu. A restaurant in Australia tried to market their
products as McSalad and McFresh and the legal case was won by McDonalds (Khan & Khan, 2013).
Patents are not granted on brand names; however, they are admitted on unique ideas, new materials,
or ingredients. With patents, Zoom has managed to gain leverage over its competitors to such as free
video conference software like Skype or Hangouts. Zoom patented a particular feature that allows its
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