Strategic Business Report: Junyu's Biotech Venture in US or Australia

This business report analyzes the optimal location for Junyu Lee's biotech venture, focusing on Australia and the United States. The report assesses factors such as intellectual property rights, SME financing, ease of starting a business, venture capital availability, adoption of disruptive technologies, and bank soundness. Through a critical analysis of data from The Global Competitiveness Report 2018, the report calculates performance indices for both countries. The analysis recommends the United States as the preferred location due to its superior SME financing, fewer bureaucratic procedures for starting a business, and a greater embrace of innovative practices. The report concludes with advice to Junyu, emphasizing the importance of securing low-interest financing, carefully selecting funding partners, and adopting modern technologies to maximize profitability.

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“Junyu Needs Your Advice”
A Business Report Submitted By:
Student Number:
Submission Date:
Number of Words:

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Executive summary
Relevant education systems prepare individuals who are motivated and inspired to come up skills
necessary to solve current societal problems through innovation and inventiveness. Upon completing her
studies Junyu fulfilled the requirements of a content-based curriculum and came up with a new drug that
can stimulate the body for a person to awake for longer hours without altering the normal body functioning.
This report covers a critical analysis of the Australian and the United States markets where Junyu
would like to locate her firm. To find out the right advice to Juny, the following concepts have been
evaluated; firstly, the topic of intellectual property right protection, secondly, the concept of SMEs
financing, the number of days when one can start a business in the country, venture capital availability
concept, review of companies advocating for disruptive technology and the issue of bank soundness.

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Table of Contents
Executive summary.....................................................................................................................................2
Task one......................................................................................................................................................4
Findings and discussion:..........................................................................................................................5
Corporate ventures.............................................................................................................................6
Crowdfunding......................................................................................................................................6
Guarantorship......................................................................................................................................6
Task 2..........................................................................................................................................................7
Task 3..........................................................................................................................................................8
Task 4........................................................................................................................................................11
Task 5........................................................................................................................................................11
Conclusion and recommendation..........................................................................................................12
Appendixes................................................................................................................................................14
APPENDIX A task 2............................................................................................................................14
APPENDIX B task 3.............................................................................................................................16
References.................................................................................................................................................19

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Task one
Introduction
The nature of an individual’s career may require him or her to stay awake for a given period within
a day. This fact has prompted societies to come up with ways to keep the mind active for longer periods
with minimal damage to their normal body functioning. The concept of innovation has proved to be a
springboard for success in many organizations (Kandampully, Bilgihan and Zhang 2016, pp. 155-164).
Individuals have different motives for investing in research and development, for instance, to solve certain
problems, enhance the rate of production in the firm or to edge out peers in the industry (Sutapa, Mulyana
and Wasitowati 2017, pp. 152-166). This means that firms must device new methods of carrying out
operations; otherwise, they would be stuck in the same position while their competitors progress to self-
sustaining levels. Scientists who are ardent proponents of innovation do not just advocate for new methods
of production but insist of unique and original ideas, which are not easy to imitate.
This report will narrow down on the efforts made by a scholar by the name Junyu Lee who invent a
new formula for manufacturing drugs which can stimulate a person’s brain to stay awake for twenty hours
with minimal effects on the normal body functioning. This is the type of inventiveness commonly referred
to as creative destruction or “Schumpeter’s gale” by economists. That is, a situation whereby the results
from research and development enable new entities to replace the old ones that tends to be irrelevant in
terms of technological change. According to Nguyen and Hipsher (2018, pp. 219-238), creative destruction
is the process whereby old firms and technology, whose returns on investments are not self-sustaining any
more are wound up. This closure prompts entrepreneurs to revert their resources-for instance, labor and
capital to more lucrative ventures.

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Creative destruction model
The model above relies on Schumpeter’s principle that business is all about an evolutionary process
of perpetual growth in discovery and “creative destruction.” This principle can be applied to the medicine
industry since experts in the industry had earlier predicted that in the future: “the way medicine will be
taught will have to shift, the way science prescribed treatment will also take a turn and the nature of
discoveries will have a different motive depending on the prevailing circumstances,” (Tidd and Bessant
2018).
Findings and discussion:
To address this concern, I conducted analytical development review to find out whether banks
would be willing to advance loans to the entrepreneur. During the analysis, my findings were as outlined
below;
invented
production
formula
new productive
unit
combination of
present and new
units
invebted mthods implemented
Resultant
uefficient nits of
production
scrapping off of
old units of
production
Creative
destruction
model

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Yes, the banks can fund Junyu Lee’s investment initiative through several platforms available in
Australia. The funding avenues include:
Corporate ventures
This is a funding opportunity by banks or non-banking final institution like an insurance firm for
individuals focused on investing in innovation and inventiveness to disrupt the value chain. Given that
Junyu Lee has invented a new drug, and intends to commercialise it, this is a sure way to get funding to
establish the business. The advantage of accessing funds through this platform is the fact that the new
entrepreneur can get financial advice from the established partners who are keen to provide the same in
order to guarantee profits in the end (Kivimaa and Kern 2016, pp. 205-217).
Crowdfunding
This is where individuals and institutions are allowed to pledge a small amount of money to the
business with a promise of exchange of a finished product. Once a prospective investor prepares a viable
business plan/budget, it can approach any financial institution to fund the project in accordance with the
contract that will be negotiated before the deal is signed. Given that the scheme requires no collateral, it can
be an avenue for Junyu Lee to access the funds for her start-up and later make payment to the financiers
when the business breaks even.
Guarantorship
A guarantor is an individual or organization that commits to service the loan advanced to the
guarantee in the event that the guarantee is unable to repay it fully. Junyu can look for guarantors who will
act as her security to access loans from the banks and repay when the business picks up. Through this
platform, she can get the funds from the banks and establish the business as well as meet the operational
costs during inception. Guarantorship can take many forms such as;

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Personal guarantee
Given that the business and the entrepreneur are two separate entities, the business owner can
undertake to act as a guarantor for the business. In this case, should the business fail to repay the money
received from borrowing, Junyu promises to repay in order to reach eligibility level to acquire loans from
the banks.
Bank guarantee
Junyu can enter in a contractual deal with the banks that may act as her guarantor to obtain loans
from other institutions. In the event that she fails to meet the obligations as signed in the contract, the
guarantor banks then undertakes to make payment.
Financial guarantee
This is where an individual is able to access funds from the bank by being offered colasteral by
an insurance firm that promises to make payment to the lender in case the borrower fails to
remit payments.
Task 2
Critical analysis of information from The Global Competitiveness Report 2018 was done to
accomplish this task. In particular, the formulae for computing the indices of performance for the
two countries encompassing the numerical value (scores) of the six (6) indicators and relative
weights (shown in Table 1) are shown below:
The general formula: Scorekw = valuekw−wpkw
frontierkc −wpk × 100
Where value,kw is the “raw” value of country w for indicator k, worst performance (wpkw) is the
lowest acceptable value for indicator k and frontierk,w corresponds to the best possible outcome.
Intellectual property right protection for Australia
s 1=¿ 5.8−wpkw
frontierkc−wpk ×100
s 1=¿ 5.8−78.09
100−80.2 × 100

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Financing SMEs for Australia
s 2=¿ 4.7−wpkw
frontierk −wpk × 100
s 2=¿ 4.7−78.09
100−61.9 ×100
Number of days to start a business for Australia
s 3=¿ 2.5−wpkw
frontierkc−wpk ×100
s 3=¿ 2.5−78.09
100−98 × 100
Venture capital availability for Australia
s 4=¿ 5.8−wpkw
frontierkc−wpk ×100
s 4=¿ 3.6−78.09
100−42.5 ×100
Companies embracing disruptive ideas for Australia
s 5=¿ 5.8−wpkw
frontierkc−wpk ×100
s 5=¿ 4.1−78.09
100−51.6 ×100
Soundness of banks for Australia
s 6=¿ 5.8−78.09
100−wpk × 100
s 6=¿ 6.4−78.09
100−89.4 ×100
The index of performance of Australia cam be computed by summing up all the numerical values
above, that is s1*a1, +s2*a2+s3*a3+s4*a4+s5*a5+s6*a6
Task 3
To accomplish this task, critical analysis was done in appendix B as follows;

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The following numerical values of the indexes of performance for each country were computed
using the scores provided by “The Global Competitiveness Report 2018,” Klaus Schwab (ed.),
World Economic Forum. Geneva, Switzerland. The general formula used was: Scorekw =
valuekw−wpkw
frontierkc −wpk × 100
Where value,kw is the “raw” value of country w for indicator k, worst performance (wpkw) is the
lowest acceptable value for indicator k and frontierk,w corresponds to the best possible outcome.
Intellectual property right protection for Australia
s 1=¿ 5.8−wpkw
frontierkc−wpk ×100
s 1=¿ 5.8−4.2
100−80.2 × 100
=8.08
Financing SMEs for Australia
s 2=¿ 4.7−wpkw
frontierk −wpk × 100
s 2=¿ 4.7−3.9
100−61.9 × 100
= 2.10
Number of days to start a business for Australia
s 3=¿ 2.5−wpkw
frontierk c−wpk ×100
s 3=¿ 2.5−2.42
100−98 × 100
=4.0
Venture capital availability for Australia
s 4=¿ 5.8−wpkw
frontierkc−wpk ×100
s 4=¿ 3.6−2.8
100−42.5 ×100
= 1.39

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Companies embracing disruptive ideas for Australia
s 5=¿ 5.8−wpkw
frontierkc−wpk ×100
s 5=¿ 4.1−3.49
100−51.6 ×100
= 1.26
Soundness of banks for Australia
s 6=¿ 6.4−5.2
100−wpk × 100
s 6=¿ 6.4−6.29
100−89.4 ×100
= 1.92
Intellectual property right protection for the United States
s 1=¿ 5.9−wpkw
frontierkc−80.9 ×100
s 1=¿ 5.9−5.29
100−80.9 ×100
= 3.01
Financing SMEs for the United States
s 2=¿ 5.8−wpkw
frontierk −79.7 × 100
s 2=¿ 5.8−4.99
100−79.7 ×100
= 3.4
Number of days to start a business for the United States
s 3=¿ 5.6−wpkw
frontierkc−wpk ×100

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s 3=¿ 5.6−5.12
100−94.9 ×100
= 9.41
Venture capital availability for the United States
s 4=¿ 5.6−wpkw
frontierkc−wpk ×100
s 4=¿ 5.6−5.21
100−76.7 ×100
= 1.67
Companies embracing disruptive ideas for the United States
s 5=¿ 5.7−wpkw
frontierkc−wpk ×100
s 5=¿ 5.7−4.9
100−77.5 × 100
= 3.56
Soundness of banks for the United States
s 6=¿ 5.8−5.31
100−wpk × 100
s 6=¿ 5.8−5.24
100−79.9 × 100
= 2.44
Task 4
Tabular presentation of the indices of performance
Australia United States
Index of performance 3.12 3.92

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Task 5
Advice to Junyu Lee about country choice and clarification of possible misunderstanding she might
have concerning the venture capital market.
From the information gathered in the investigation of the venture capital markets in the two
countries, I would recommend the United States as the best destination for investment. The following are
some of the reasons why I would recommend the Unites States as the ideal destination for investment:
There is a higher level of financing of SMEs in the country compared to Australia. The numerical
value attached to provision of support to small and medium entrepreneurs is 5.8 in the United States
compared to 4.7 in Australia. Given that she is a new investor, it would be proper to venture in the business
located in a country where there is unlimited access to funding. Banks and other non-banking financial
institutions in the United States require few legal formalities to advance loans to SMEs that are located in
their country( Hornbeck and Keniston 2017, pp.1365-98). Secondly, the United States is a good place to
establish a business since it allows more days for an individual to commence trade. This means that there
are few bureaucratic procedures needed for one to start a business in the country. From literature, the value
attached to the number of days one is capable of starting a business in the United States is 5.8 compared to
the 2.5 value attached to the same in Australia. Thirdly, innovative practices in the United States enjoy 5.9
empirical value attached to performance indicator compared to the situation in Australia where there is a
5.8 significance.
Conclusion and recommendation
There is need for critical appraisal of the environment where an individual intends to establish his
business. Proper market research and a robust approach to challenges in business are key to the success of
every start-up. A country may have several factors that make it ideal for establishing a firm but can never
be without the corns. Therefore, I would recommend the following for Junyu to maximize her profits and
business prosperity;

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1. Borrow money from institutions that require little interest since the business is young and profits
are yet to be guaranteed. The price of borrowed funds determines the profitability of the venture
during the periods when the loans are being serviced. You must be careful not to fall in the
hands of amoral capitalists who look for every opportunity to become the owners of other
peoples’ businesses when they become insolvent.
2. Accept funding from firms with longer loan maturity periods because the business has no
ready market hence the rates of return are just mere speculations. This will give you time to plan
how to repay the debt without any inconvenience.
3. Locate the business in a country that can allow you to adopt the use of modern technology in the
production process to reduce the cost of business. This is normally possible because she will
have to employ few experts who know what they are doing. Secondly, machines are always
accurate and not susceptible to fatigue and boredom.

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Appendixes
APPENDIX A task 2
The formulae for computing the indices of performance for the two countries encompassing the
numerical value (scores) of the six (6) indicators and relative weights (shown in Table 1) are
shown below:
The general formula: Scorekw = valuekw−wpkw
frontierkc −wpk × 100
Where value,kw is the “raw” value of country w for indicator k, worst performance (wpkw) is the
lowest acceptable value for indicator k and frontierk,w corresponds to the best possible outcome.
Intellectual property right protection for Australia
s 1=¿ 5.8−wpkw
frontierkc−wpk ×100
s 1=¿ 5.8−78.09
100−80.2 × 100
Financing SMEs for Australia
s 2=¿ 4.7−wpkw
frontierk −wpk × 100

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s 2=¿ 4.7−78.09
100−61.9 ×100
Number of days to start a business for Australia
s 3=¿ 2.5−wpkw
frontierkc−wpk ×100
s 3=¿ 2.5−78.09
100−98 × 100
Venture capital availability for Australia
s 4=¿ 5.8−wpkw
frontierkc−wpk ×100
s 4=¿ 3.6−78.09
100−42.5 ×100
Companies embracing disruptive ideas for Australia
s 5=¿ 5.8−wpkw
frontierkc−wpk ×100
s 5=¿ 4.1−78.09
100−51.6 ×100
Soundness of banks for Australia
s 6=¿ 5.8−78.09
100−wpk × 100
s 6=¿ 6.4−78.09
100−89.4 ×100
The index of performance of Australia cam be computed by summing up all the numerical values
above, that is s1*a1, +s2*a2+s3*a3+s4*a4+s5*a5+s6*a6

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APPENDIX B task 3
The following numerical values of the indexes of performance for each country were computed
using the scores provided by “The Global Competitiveness Report 2018,” Klaus Schwab (ed.),
World Economic Forum. Geneva, Switzerland. The general formula used was: Scorekw =
valuekw−wpkw
frontierkc −wpk × 100
Where value,kw is the “raw” value of country w for indicator k, worst performance (wpkw) is the
lowest acceptable value for indicator k and frontierk,w corresponds to the best possible outcome.
Intellectual property right protection for Australia
s 1=¿ 5.8−wpkw
frontierkc−wpk ×100
s 1=¿ 5.8−4.2
100−80.2 × 100
=8.08

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Financing SMEs for Australia
s 2=¿ 4.7−wpkw
frontierk −wpk × 100
s 2=¿ 4.7−3.9
100−61.9 × 100
= 2.10
Number of days to start a business for Australia
s 3=¿ 2.5−wpkw
frontierkc−wpk ×100
s 3=¿ 2.5−2.42
100−98 × 100
=4.0
Venture capital availability for Australia
s 4=¿ 5.8−wpkw
frontierkc−wpk ×100
s 4=¿ 3.6−2.8
100−42.5 ×100
= 1.39
Companies embracing disruptive ideas for Australia
s 5=¿ 5.8−wpkw
frontierkc−wpk ×100
s 5=¿ 4.1−3.49
100−51.6 ×100
= 1.26
Soundness of banks for Australia
s 6=¿ 6.4−5.2
100−wpk × 100
s 6=¿ 6.4−6.29
100−89.4 ×100

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= 1.92
Intellectual property right protection for the United States
s 1=¿ 5.9−wpkw
frontierkc−80.9 ×100
s 1=¿ 5.9−5.29
100−80.9 ×100
= 3.01
Financing SMEs for the United States
s 2=¿ 5.8−wpkw
frontierk −79.7 × 100
s 2=¿ 5.8−4.99
100−79.7 ×100
= 3.4
Number of days to start a business for the United States
s 3=¿ 5.6−wpkw
frontierkc−wpk ×100
s 3=¿ 5.6−5.12
100−94.9 ×100
= 9.41
Venture capital availability for the United States
s 4=¿ 5.6−wpkw
frontierkc−wpk ×100
s 4=¿ 5.6−5.21
100−76.7 ×100
= 1.67
Companies embracing disruptive ideas for the United States
s 5=¿ 5.7−wpkw
frontierkc−wpk ×100

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s 5=¿ 5.7−4.9
100−77.5 × 100
= 3.56
Soundness of banks for the United States
s 6=¿ 5.8−5.31
100−wpk × 100
s 6=¿ 5.8−5.24
100−79.9 × 100
= 2.44
References
Hornbeck, R. and Keniston, D., 2017. Creative destruction: Barriers to urban growth and the
Great Boston Fire of 1872. American Economic Review, 107(6), pp.1365-98.

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Kandampully, J., Bilgihan, A. and Zhang, T.C., 2016. Developing a people-technology hybrids
model to unleash innovation and creativity: The new hospitality frontier. Journal of Hospitality
and Tourism Management, 29, pp.154-164.
Kivimaa, P. and Kern, F., 2016. Creative destruction or mere niche support? Innovation policy
mixes for sustainability transitions. Research Policy, 45(1), pp.205-217.
Nguyen, H.T. and Hipsher, S.A., 2018. Innovation and Creativity Used by Private Sector Firms
in a Resources-Constrained Environment. In Examining the Private Sector's Role in Wealth
Creation and Poverty Reduction (pp. 219-238). IGI Global.
Sutapa, S., Mulyana, M. and Wasitowati, W., 2017. The role of market orientation, creativity and
innovation in creating competitive advantages and creative industry performance. Jurnal
Dinamika Manajemen, 8(2), pp.152-166.
Tidd, J. and Bessant, J.R., 2018. Managing innovation: integrating technological, market and
organizational change. John Wiley & Sons.