Impact of Contextual Factors on Costume Jewelry Business Strategy

This report analyzes the contextual factors that impact a costume jewelry business, specifically focusing on a startup in Sydney, Australia. It identifies both internal factors, such as innovation, knowledge management, and entrepreneurship, and external factors, including governmental regulations and competition. The report emphasizes the importance of innovation, discussing disruptive and open innovation models, and the role of entrepreneurship in exploiting opportunities for profit. It explores how these contextual factors influence business strategy, particularly the need for continuous improvement and adaptive execution, and how they impact decision-making processes. The analysis highlights the significance of adapting to changing customer attitudes and technological advancements. The report concludes by reiterating the crucial role of contextual factors in shaping a successful business strategy, structure, and overall practice for the costume jewelry venture.

Running Head: MANAGEMENT AND BUSINESS CONTEXT
MANAGEMENT AND BUSINESS CONTEXT
Assignment B
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MANAGEMENT AND BUSINESS CONTEXT
Introduction
Business organizations can succeed by formulating and implementing effective strategies
which align with the vision and mission of the organization (Kronsbein, Meiser, & Leyer,
2014). Strategic management is dynamic because the formulated strategies largely depend on
the environment in which the company operates. Almost all business organizations don’t
have exactly similar environments; it suggests that the outcomes of the business enterprises
are largely dependent on the context of the business (Shin & Edington, 2007). The paper
analyses the contextual factors impacting the Costume Jewellery business introduced in the
previous paper. A jewelry store is started in Sydney, and the contextual factors that impact
the jewelry business are identified and explained. The internal and external contextual factors
that impact the business are identified. Costume jewelry business is mostly an innovative and
entrepreneurial venture and the contextual factors related to innovation and entrepreneurship
are analyzed. The impact of the contextual factors on the business strategy, structure and
decision-making are discussed. The paper discusses how the contextual factors will be
utilized for enhancing the business practice of jewelry business.
Contextual Factors
Contextual factors can be defined as the characteristics of the environmental factors which
largely affect the business practice. The contextual factors can be external like policies, legal
and governmental regulations, and internal factors which include the size of the firm,
innovation, knowledge management, and entrepreneurship. The costume jewelry business is
an innovative entrepreneurial venture, and the most important contextual factors that impact
the business are innovation and entrepreneurship.

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Innovation
Innovation is considered as the key driving force which shapes competition and enables the
organization to take revolutionary approaches to business operations and thereby transform
the nature of the market and the industry in which it operates (). Innovation takes place on
three important levels namely Revolution, Renewal and Resilience. Revolution relates to the
phase where new products or business approaches are designed by challenging the existing
fundamentals of the industry. Renewal relates to the phase where the process of rethinking
and recreating existing models take place. Lastly, Resilience refers to continuous
improvement and reconstruction of new product and services.
Disruptive and open innovation is the new innovation concepts which should be adopted by
organizations today so as to compete and sustain in the industry. Disruptive innovation aims
at improving the not so good products, but these products are introduced as simpler and
attract less demanding customers. Open innovation is the modern model of innovation and as
discussed by Chesbrough (2003) in open innovation model, the organizations can
commercialize the ideas generated by it and also the innovations of outside firms and deploys
the new innovations to explore new markets (Chesbrough, 2003).
Researchers have identified norms that promote creativity as well as innovation. According to
Dawson and Andripoulous (2014), six important norms should be seen in innovative
organizations (Dawson & Andriopoulos, 2014). The organizations must foster an innovative
culture. These norms include stress on idea generation, and inculcating a learning culture and
risk taking attitudes, handling the conflicts sportingly and supporting the necessary change
while tolerating some mistakes. Contrasting to these six norms, Dyer, Gregson and
Christensen (2009), have a different approach which suggests that innovation can be
inculcated and taught to individuals (Dyer, Gregerson, & Christensen, 2009). Dyer et al.

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(2009) also define five basic capabilities which can be noticed in the innovators. These
capabilities are an association, questioning, observing, experimenting and networking. The
jewelry business is a huge market and can sustain competition if it provides innovative
products to its customers.
Entrepreneurship
Entrepreneurs are said to exploit innovation to bring about a change for earning profits
(Burns, 2009). Entrepreneurship is referred as a mindset that identifies the opportunities and
undertakes actions to gain economic success (Burns, 2008). McMillan and McGrath (2000)
argue that entrepreneurs continuously search for high-potential opportunities. The
entrepreneurs would then frame the opportunities in long-term and short-term goals
(McGrath & McMillan, 2000). The entrepreneurs would stock the interesting opportunities in
the opportunity register so that they can choose from best possible opportunities. Another
important trait of entrepreneurs include shifting the focus, when necessary, and the
entrepreneurs focus on limiting the downside of the opportunity until the expected outcome
from the opportunity is achieved. Lastly, entrepreneurs promote adaptive execution, which
suggests that the execution of the idea is not always according to the plan and that the
execution will change as required.
Entrepreneurship is an important contextual factor which will impact the business process
and strategy. The jewelry industry is highly competitive and entrepreneurship concepts will
help in focusing on existing concepts and developing new strategies which will help in
enhancing business practice.
Contextual Factors and Business Strategy

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Competition and innovation are the two driving forces in business organizations today.
(Choudhary, 2016). Both domestic and international markets face huge competition as the
customers get more demanding and the companies have much more to offer (Choudhary,
2016). Changing customer attitudes, technological advancements and environmental
uncertainties force managers to choose correct strategies so as to effectively allocate
resources for better functioning of departments to achieve success (Choudhary, 2016).
Innovation highly influences the external contextual factors. Using the innovation strategy
and concept, the business organization should work towards continuous improvement (Sila,
2007).
Open innovation can be used effectively to include the best designs from newcomers in the
industry and also that of known brands. Moreover, the business organization can take a step
forward and customize the jewelry with a specific time of delivery. Thus the business will
work towards continuous improvements and tap different opportunities to invest in current
markets as well as divest in upcoming markets (Scaper et al, 2014). Hence, open innovation
will allow the business organization to develop new strategies for commercializing the
existing innovative ideas and the innovations from others. Thus, innovation will largely
influence the business strategies. Moreover, the business organization will tap new trends in
the market, and also exploit the new opportunities for entering new markets, and expand the
business.
Similarly, entrepreneurial activities of the organization like focusing on limiting the downside
until the expected outcome from the venture are achieved (Brinckmann, Grichnik, & Kapsa,
2010). Hence, the focus of the business strategy can be changed whenever required so as to
limit any losses. Thus, it can be said that innovation and entrepreneurship can be used to
enhance the strategy and business practice.

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Contextual Factors and Business Decisions Making
Almost all strategic decisions are unique and influence by contextual factors (Elbanna, 2011).
It is evident that strategic decisions are context-specific, and hence, strategic decision-making
can be enhanced by analyzing the important contextual factors. Innovation and
entrepreneurship are major contextual factors in the new jewelry start-up plan.
Entrepreneurial concepts suggest that business organizations must continuously improve and
implement adaptive execution strategy so that the strategies and strategic decisions can be
changed before actual implementation and execution. Hence, entrepreneurial concepts can
impact and enhance the business decision-making process (Brinckmann, Grichnik, & Kapsa,
2010).
Innovation on the other side will encourage entrepreneurs to tap the important opportunities
which can bring about a change in the industry. Thus, innovative practices and open
innovation strategy will enable business organizations to tap important high-potential
markets, and expand their business. Moreover, innovation and entrepreneurship will enable
organizations to become dynamic and exploit and explore existing and new markets, to earn
high profits.
The external contextual factors like the policies and competition, customer demands will also
impact the business decision making process. Competition and customer attitudes are major
external contextual factors that affect jewelry business. Innovation culture can be inculcated
in the organization to encourage the generation of new ideas, which will enable the
organization to sustain competition and get a competitive advantage. Innovation will foster
entrepreneurship and allow the entrepreneurs to tap similar high-potential opportunities. For
example, the jewelry brand can sponsor some Fashion weeks, so as to get recognized and also
display their innovative designs and ideas. Thus, innovation and entrepreneurship concepts

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can be used effectively to enhance the business decision-making process. The decision-
making process is highly context-specific, and the concepts of innovation and
entrepreneurship will allow the organization to make effective strategic decisions.
Conclusion
The strategies, structure and business practice of business organizations are largely
influenced by contextual factors. Strategic decisions are context-specific, and hence, it is
important to identify and analyze the contextual factors so as to enhance the strategic
business practices. Innovation and entrepreneurship are identified as important contextual
factors that affect the structure, strategy and business practice for an innovative jewelry
business. The innovation and entrepreneurship concepts can be successfully applied so as to
enhance the business practice and decision making. Costume jewelry business is mostly an
innovative and entrepreneurial venture and the contextual factors related to innovation and
entrepreneurship are analyzed. The impact of the contextual factors on the business strategy,
structure and decision-making are discussed. The paper discusses how the contextual factors
will be utilized for enhancing the business practice of jewelry business.

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