Entrepreneurial Ventures: Impact on the Economy and Society

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Entrepreneurship and Small Business Management
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Executive Summary
The assignment studies the several types of entrepreneurial structures, the various
advantages, and the disadvantages they present. It further studies these enterprises
based on public and corporate sectors, while mentioning certain notable entrepreneurs
as relevant examples. The characteristic trains and core competencies of these
entrepreneurs have also been presented in a concise manner. The requirements of a
entrepreneurial venture in order to become successful over a prolonged period have
also been presented based upon specific organizations that have managed to grow in a
sustainable manner.
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Table of Contents
Introduction...................................................................................................................... 3
LO1.................................................................................................................................. 3
P1 Examine different types of entrepreneurial ventures and explain how they relate to
the typology of entrepreneurship......................................................................................3
P2 Explore the similarities and differences between entrepreneurial ventures................4
Entrepreneurship in public and corporate sector (M1, D1)...............................................5
LO2.................................................................................................................................. 6
P3 Interpret and assess relevant data and statistics to illustrate how micro and small
business impact on the economy.....................................................................................6
Importance of start-ups in the economy (M2)...................................................................7
P4 Explain the importance of small businesses and business start-ups to the growth of
social economy................................................................................................................ 8
The impact of business on the Local, Regional, National, International economy (D2). 10
LO3................................................................................................................................ 11
P5 Determine the characteristic traits and skills of successful entrepreneurs that
differentiate them from other business managers..........................................................11
Examples of entrepreneurs (M3, D3).............................................................................12
P6 Assess how aspects of the entrepreneurial aspects personality reflect
entrepreneurial motivation and mindset.........................................................................12
LO4................................................................................................................................ 14
P7 Examine, using examples, how background and experience can hinder or foster
entrepreneurship (M4, D4).............................................................................................14
Conclusion and Recommendations................................................................................16
References.....................................................................................................................17
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Introduction
Entrepreneurship fundamentally relates to the starting of a business enterprise by an
individual or a group of individuals after factoring in the various elements of risk that are
typically presented by the overall business environment. These enterprises can be set
up using a multitude of legal and organizational structures, but the key to success within
these ventures essentially rests upon the core competencies and successful traits that
are required within the entrepreneurs. The various entrepreneurial ventures have a
diverse range of impacts on the overall society and the environment, which have been
discussed in the ensuing segments. The individual background and the human psyche
of these entrepreneurs are integral parts of the operations of the venture, and influences
the overall organization in every aspect including the business decisions, the several
functionalities, products and services offered and so on (Fayolee and Gailly, 2015). The
assignment seeks to quantify these varying characteristics using relevant available
empirical data and statistics, along with c comprehensive overview of successful
organizations that started out as entrepreneurial ventures and have achieved global
success in a relatively short period. Entrepreneurial ventures typically go through three
stages as part of their cycle, which include the birth stage, maturity stage and the
breakthrough stage (Aldrich, 2017). In the context of the given scenario, a client has
approached Redrock consulting in order to start a new venture, and the report is
focused towards assisting the client in setting up the business
(Redrockconsulting.co.uk. 2019).
LO1
P1 Examine different types of entrepreneurial ventures and explain how they
relate to the typology of entrepreneurship
As mentioned by Zahra and George, (2017), ‘entrepreneurship refers to the starting of a
business venture with the objectives of profitability and sustenance over a period of
time.’ The individual or the group of individuals who start the venture are typically
termed as entrepreneurs, and as put forward by Margarita, (2015), ‘entrepreneurs are
individual founders of a business organization who initiate operations with the goal of
earning profits and subsequently grow their scale of operations.’ The legal and
organizational structure varies massively among entrepreneurial ventures. They can be
segmented into four distinct types based on the scale and nature of their business
functionalities.
Small business or lifestyle ventures: Small businesses are the most common forms
of business in the UK, and have a minimal operational scale as well as a small number
of employees. They account for almost 98% of the businesses in the UK, and some of
them have managed to establish themselves owing to their technological superiority
(Frese and Gielnik, 2014).
Scalable start-ups or high growth ventures: Scalable start-ups initiate operations
with the primary objective of significantly scaling their operations in the near future
(Mason and Brown, 2014). The model is highly suitable for innovative tech companies,
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as several investors and venture organizations are more likely to support these
businesses provided the potential for growth is identified and acknowledged.
Large organization: Large organizations are typically backed by successful
corporations, and engage heavily in policies of acquisition and expansion. The scale of
operations is also relatively large within these companies, because of which these
enterprises find it difficult to engage in a uniform system of disruptive innovation.
Social venture: Social ventures focus their products and services towards uplifting the
society and improve the overall standard of living. These ventures do not operate with
the motive of generating profits and work based on voluntary donations and charitable
contributions.
P2 Explore the similarities and differences between entrepreneurial ventures.
The key similarity between entrepreneurial ventures is the massive presence of the risk
factors and the distinct lack of financial resources and working capacities. Societal
needs are also another similarity that ventures seek to capitalize and grow exponentially
while generating profits. Individual businesses further generate an independent system
of operation for the entrepreneurs. However, these similarities do not stand correct for
social ventures. Key differentiating factors also exist within the various venture types,
and they are as follows.
Differentiating
factors
Small
business
Scalable
startup
Large
organization
Social ventures
Motives Survival
tends to be
the primary
motive
Dominate
market
positions
through
superior
product quality
Increase revenue
figures and brand
presence
Improve living
standards and
uplift society
Degree of risk High risk
degree
High risk
degree
Relatively lower
degree of risk
Low risk owing to
government
subsidies and
support as well
as community
appeal
Scale of
operations
Very small
scale of
operations
Small scale but
can grow
overtime
Relative large
scale of
operations
Generally small
scale of
operations, but
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some social
ventures can
grow into
multiple
countries
Employee
count
Lower than
ten
employees
Ten to two fifty
employees
Typically have
more than two
fifty employees
Limited number
of employees
and large
number of
volunteers and
willful workers
Legal
structure
Could be sole
proprietors or
partners with
limited and
unlimited
liabilities
Typically
undertake the
partnership
strategy, but
can grow into
corporations
Registered
company formats
are used in order
to maintain a
legitimacy in their
large operational
scales
Most non-profits
utilize a trustee
or a board
system of
functioning and
register as a
charitable
organization
(Dees, 2017)
Table 1: Differences between the entrepreneurial ventures
(Source: Created by the learner)
Entrepreneurship in public and corporate sector (M1, D1)
Public sector entrepreneurship refers to the ventures that are pushed by governments
across the world to deal with the increasing number of challenges that come up in the
context of public services. Public entrepreneurs require both the skill sets of a business
minded individual as well as a public servant, and must engage actively in the process
of bringing innovation within the public sector. Social enterprises are relevant examples
of public sector entrepreneurial ventures.
Corporate sector entrepreneurship is the more common between the two, and the
primary objective within the sector remains to generate profits and grow at the largest
scale possible (Chatterji et al., 2014). Corporate entrepreneurs are highly functional
individuals and focus on effective management policies across the organization. Most of
the variants of entrepreneurship models as discussed above operate within the
corporate sector, and include the likes of small businesses, scalable start-ups and large
organizations.
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LO2
P3 Interpret and assess relevant data and statistics to illustrate how micro and
small business impact on the economy.
The relevance of Gross Domestic Product and its impact on the small and medium
enterprises of small companies like Stirling Ackroyd, Gloucester Cleaning and many
other start-ups of the economy of UK are discussed. The influence of small scale
enterprises, large sector companies and SMEs on the global economy is determined in
brief. The role of all these business enterprises in the economic growth of London and
the whole United Kingdom are referred to in this part of the report.
Creativity and Innovation
The process of creativity emphasizes on the ability to solve any business issue in a
unique and productive way. It requires the business individuals to be able to take risks
and follow the intuition so as to enable features in the products and services which
would to the growth of the business (Afrifa and Berchie, 2019). This means overcoming
the regular routine that the small businesses follow and integrating new ideas in the
business processes that would facilitate customer satisfaction.
Innovation is the ability encourages creativity in the business procedures, like the
development of products, boosting the customer service features and strengthens
marketing aptitude. The traditional methodologies of conducting businesses are fast
changing in the new evolving business domains, especially in start-ups and other small
and micro business ventures. The competitive advantage is also heightened with the
innovative skills and the employees are provided the scope to do more brainstorming
rather than produce usual quality of outcomes.
Sources of innovation
The sources of innovative business ideas mostly comes through surveys, training
processes, creativity by the experienced staff of an organization, pass time ideas,
individual talents of the employees, identifying new market gaps, understanding the
constantly changing preferences of the customers, communicating with different medias
and other exhibitory personnel and merging with other contemporary small business
organizations (Brown, 2018). The start-ups, which are on the rise, create new ideas
through the above-mentioned sources.
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Figure 1: Innovation
Source: (Brown, 2018)
The SMEs has account for 60 to 70% of the employment generation in the countries of
UK. The outsourcing protocols of large firms have resulted in the growth of these
businesses. Over 5.7 million companies of SME are small and micro companies. These
are creating more markets for business functions and individuals who are 30 or 40
years of age are implementing their creativity skills by forming start-ups (Cooper, 2017).
The influence of the small economies has also resulted in large scale home workers
who are estimated to be 4.2 million.
Importance of start-ups in the economy (M2)
On the other hand, large organizations are helping in generating more revenues for the
country like London and the whole UK. The eradication of poverty is also another key
factor which these large, medium and small organizations give importance. In England,
88 % of these small scale businesses are located and Wales is the second highest with
70% of the enterprises. London contributes the lowest with 45% of employment
generation through SMEs. Scotland’s SME contribution impacted for 53% of job
creation and 99% of business formations. Northern Ireland creates 80% of the jobs
through entrepreneurship. London, especially, has private sector businesses, whose
99.8% covers SMEs, employment from whom is 49.8 % and the business turnover
amounts £430 billion (Lipset, 2018). Whereas, in UK, 5.4 million SMEs are present,
micro businesses are 5.3 million and large scale organizations are only 0.1% of the
whole business sector.
Hence, the importance of creativity and innovation are discussed for the growth of the
SME businesses. The different sources of innovative opportunities are determined and
the impact of SMEs on London and other regions of UK are inferred as well.
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P4 Explain the importance of small businesses and business start-ups to the
growth of social economy.
Here the topics that are going to be discussed are the role of social economy,
importance of social enterprises and their impact in the growth of the economy of the
society of UK. The various protective measures of the intellectual property rights are
discussed as well along with the factors like size, profit growth, sustainability and
adaptability of the various size of businesses are developed.
Social economy deals with the relationship between the behaviour of the social aspects
and the growth of the economy. The ethics, norms and other philosophies that shapes
the behaviour of the consumers according to the changes in the historical, political and
social conditions of the entire economy. A social enterprise mostly functions in
improving the lifestyle of the various communities and works for the welfare of the
society as well as environmental goals. These enterprises develop a mission, maintain
transparency in the business operations and reinvest the maximum of the profits for the
environmental mission (Nambisan, 2017).
The conflicts associated with social enterprise includes commercial against societal
goals, democratic vision and the quality of the objectives demanded by the society. Few
examples of social enterprises are The big issue, Eden Project and Fifteen.
Figure 2: Social Enterprise
Source: (Nambisan, 2017)
The role of Corporate Social Responsibility is to function in the interests of the
environment and the society at large. The SME companies follow a green tribunal in
order to provide for the welfare of the society. This further helps in employee retention,
improvement of sales and more success in generating profits.
The social economy entrepreneurs play a significant role in impacting the growth of
GDP which the public and private sector overlooked, thus improving the productivity of
the country, enhancing employment and other social aspects (Meyer et al., 2017). The
globalization aspects are also taken under consideration which led to the privatization of
the government business functions.
The social organizations like charities and other voluntary companies are smaller than
other business organizations in the private and public domain. The society and the
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environment play a critical factor in the development and recognition of a business
enterprise.
Intellectual Property Rights
These are the rights that the business owners possess which enable them to have
developed ownership of the products, ideas and other services they are generating
which are further contributed to the growth of the national or global economy. These can
be different forms, such as, copyrights, trademarks, patents and trade secrets. Any
breaching of these rights like in forms of copies or serving low quality products with the
usage of the brand name of the original company can result in punishments on criminal
grounds (Boh et al., 2016). In order to create copies, any cheap organization needs to
acquire permission of the genuine brand.
Figure 3: Intellectual property
Source: (Meyer et al., 2017)
The factors based on which the business are considered are given below:
Factors Small scale Medium
enterprises
Large companies
Size Fewer than 100
employees.
Less than 250
members
More than 250 staff
Turnover Less than £6.5
million
Below £20 million Above £50 million
Profit Almost £9000 Approximately
£200,000
Approx £5,00,000
Growth Relatively limited
growth
opportunities
Strive to grow into
large businesses.
Focuses on global
expansion
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Innovation Less
innovativeness
More innovation
than small scale
businesses.
Higher scope of
innovation due to
increased funding.
Sustainability Less sustainability
and focus on
environment
Comparatively
increased
sustainability ratio
Emphasizes on
CSR and other
environmental
goals.
Adaptability Less adaptable due
to poor
infrastructure
Medium adaptability
factors in terms
changes in trends
Significant adaptive
quality to gain
competitive
advantage.
Table 2: Factors depending on the size of business
Source: (Boh et al., 2016)
The impact of business on the Local, Regional, National, International economy
(D2)
Impact of SMEs on Local Economy
In the local level, there are several small scale enterprises which compete severely
resulting in increase in the quality of the products and the services that are delivered to
the customers. The creation of jobs is another crucial factor that gets improved in the
local companies and business endeavours. The taxation system of the industries also
gets improved with the changes in trends and environmental conditions.
Impact on Regional Economy
The businesses in UK distribute their operations to the other neighbouring towns and
cities such the brand awareness gets improved among the regional customers (Acs et
al., 2016). The economy of regional level differs a lot, like disparities in income
generation and bad condition of the employment generation. All these problems are
solved with the introduction of the SMEs.
Impact on National Economy
Expanding the businesses on a national level further improves the profitability and the
productivity of the SMEs. These kinds of businesses which can contribute on a national
level are relatively small, yet on achieving this standard, the tax incurring is significantly
huge. Depending on the kind of SME, there are different issues and complications faced
by them on a national level.
Impact on International Economy
Due to poor capital investment, the small companies do not possess that much potential
to expand on an international level (Block et al., 2015). However some companies
develop their business as the import and export factors. There accumulation of the
foreign currencies get boosted which further benefits the economy of the country.
Thus, the SMEs including the social enterprises play a key role in the development of
the economy in local, regional, national and international domains. The protection of the
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IPR of these small scale business owners is also necessary so that they can be saved
from any frauds or copyright issues.
Figure 4: Impact on Economy
Source: (Block et al., 2015)
LO3
P5 Determine the characteristic traits and skills of successful entrepreneurs that
differentiate them from other business managers.
This section deals with understanding the personal characteristics and traits of the
business entrepreneurs which leads them to success in their respective fields.
Examples are provided of successful business entrepreneurs who exhibited potent
aptitude in achieving business growth to a global level.
Personal traits and characteristics
A manager is an individual who administers the roles of the employees performing in
different functional departments of an organization (Huggins and Thompson, 2015). The
skills that the managers require are delegation of the assigned tasks and adhering to
the norms set by the company authority. On the other hand, the entrepreneurs have to
create the vision and deal with the variety of risk factors associated with their decisions.
They tend to hire subordinates after an initial period of formation of the company.
Managers possess effective communication skills and can make potential decision to
meet the goals of the company, whereas, the entrepreneurs have the capability to take
risks in both financial and personal aspects. The channelizing of these qualities and
encouraging the team members in times of crisis is the motto of the leader (Suddaby et
al., 2015). Other skills like business and technical skills, developing quality relations
amongst the members to create a positive work and coming up with innovative solutions
during times of crisis.
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