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Unit 5 Entrepreneurship and Small Business Management

Introduction

The term Entrepreneurship can be defined as a process, which assists in identifying various sorts of opportunities. These opportunities are then converted to multiple services as well as products. The conversion takes place by innovatively utilising few ideas along with a creative composure. It is observed that in recent era development of the economy of a country is dependent upon the capabilities of an entrepreneur. Entrepreneur helps in developing a country's standard of living by their innovative products as well as service ranges. They also help in earning huge revenue amount and thus entrepreneur's help in developing a country's financial stature. This report will provide emphasis on how an entrepreneur can affect a country’s growth.

Part 1:

P1: Different types of the entrepreneurial ventures and its relationship with the entrepreneurship typology:

Entrepreneurship is defined as activities, which are associated with establishing the new business. The establishment of the new business is having financial risks along with the profit generation's hope. An entrepreneur can achieve the successful entrepreneurship if they are having the capabilities as well as responsibilities for undertaking the risk of the business and running the business (Morris et al., 2016). Therefore, entrepreneurial ventures are significant for starting up a new business. Entrepreneurial ventures are mainly of three types, namely, ventures of smaller profit, ventures for high growth and the lifestyle ventures.

Ventures for smaller profit are not established for earning money of huge amount. Achieving the growth is considered to be significant for this type of ventures. For instance, Mom and Pop stores can be considered as a venture for smaller profit. This store is independent, regulated and ventures owned by the family having the very small number of employees. This sort of venture of business is owned and maintained by various independent entrepreneurs and are being associated with the process of decision making as well as have the capabilities for undertaking risks of a high amount (Kestiing and Gunzel-Jensen, 2015).

Ventures for high growth are considered to be those sorts of entrepreneurial ventures, which assist the entrepreneur in securing the profit at an optimum amount. This type of venture is being established to achieve the high amount of fund. This venture has significant concern with their growth. Ventures for higher growth incorporate manufacturing of unique as well as innovative products to secure sales of a huge amount (Durufle et al., 2017). Various entrepreneurs follow the venture for high growth as they aim at having high growth along with earning a huge amount of revenues. For instance, techno-entrepreneurs, as well as corporate entrepreneurs, follow this entrepreneurial venture. Entrepreneurs following this venture facilitate innovation to generate innovative products (Morris et al., 2016). They also maintain the business within the environment, which is full of risk.

P2: Explores the differences and similarities among the different types of ventures and differently sized ventures:

Different ventures of entrepreneurship, which are being discussed in the above section, possess few differences as well as similarities. Differences, as well as similarities, are being discussed in the table.

Different types of attributes

Small

Medium

Macro

Decision-making process

Every decision related to the business is being taken by the business owner.

Both the officials at the higher level as well as business owners take a business related decision.

Owners, as well as officials of various departments, take business-related decisions.

Organisation’s management

The organisation is being managed by the business owner.

Both owners, as well as higher professionals, are responsible for business management.

Business operation is being managed by the board of directors, which include owners as well as top-level officials.

Organisation’s customer base

People of the locality

Industry Niche

Native people

Utilised processes

The utilisation of informal processes

Both informal, as well as formal processes, are being utilised

Both informal, as well as formal processes, are being utilised

Organisational Planning

Planning is mainly done for short-term

Both short, as well as long-term planning, is done

To gain immediate profit short-term planning is conducted and long-term planning is done for the long run of the business.

Opportunities for personal development

There are few opportunities for facilitating the personal development

Few specific professional achieve the personal development

Many professional achieve personal development as there is huge growth in this type of organisation.

Challenges faced by organisations

The significant challenge confronted by any small business is maximising, attracting as well as retaining the customers. Challenges like less profit as well as a lower flow of cash are also being faced.;

This organisation confront the problem as they require hiring large workforce for enhancing the productivity of the organisation. The problem with initiating the well being of strategy for the employees.

Macro organisations face problem in managing their employees as there are more employees in this organisation.

Table 1: Similarities as well as Differences within the small, medium and macro organisation

(Source: Alvarez-Garrido and Dushnitsky, 2016)

The table exhibits difference as well as similarities of various venture size. It is being observed that the process of decision making for small businesses are mainly done by the business owners, whereas for the medium and the macro organisation business-related decisions are being taken by owners, a board of directors as well as top-level officials. Planning for the short term is being done by all the three type of industries, but it is being done for various purposes. Planning for long-term is being done by both the medium as well as the macro organisation as they required earning the profit for a long period. A macro organisation creates planning for a short term for achieving immediate profit. Considering the factor of personal development, there are fewer opportunities for the employees of a small organisation, whereas there are huge chances for the employees of a macro organisation.

Different attributes

Private venture

Social ventures

Public ventures

Distribution of profit

Distribution of profit takes place in between the investor as well as in between the shareholders

Both shareholders, as well as the society, achieve the profit from this type of venture.

Both shareholders, as well as the society, achieve the profit from this type of venture.

Value

Generation of corporate value is observed

Social value is generated from social ventures

Both social, as well as the corporate value, is being generated.

Causes for development of strategy

Development of market share value

Addressing as well as the development of social objectives

Development of society’s lifestyle.

Sources of Money

Loans are being taken from various banks as well as issuing the debentures

Donations are being received from various wealthy foundations.

Money is; collected from tax, penalty as well as excise duty

Challenges confronted

The challenges confronted by this type of organisation are to achieve the profit of huge amount as well as they also confront issues due to the policy of HR.

The significant challenged faced by the social venture is to enhance the income as well as fundraising.

The significant challenges faced by the public organisation that is by the government is to provide efficient services during the crisis. They also confront problems in the effective management of the asset and the organisational infrastructure.

Main Aim

Achieving profit at a huge amount and concentrating on organisational growth

Excellent delivery of the services and high customer satisfaction

The scope of the social value of the higher amount

Table 2: Similarity as well as differences of various sorts of business ventures

(Source: Dutta and Folta, 2016)

It is being observed from the table that private sector organisations only create the corporate value whereas social organisations create social value and the public organisations create both values. Considering the development of strategy factor, the private organisation develops their strategy from enhancing their market share value as well as enhances the organisational growth. On the other hand, the public organisation develops their strategy for providing wellness as well as prosperity to the society, and the social organisation develops their strategy for enhancing the customer satisfaction.

P3: Interpret, assess and present the impact of the micro, as well as small businesses, have on the economy:

In the United Kingdom, small and micro-enterprise plays a significant role in their economic development. As stated by the current statistics there are near about 5.2 million small as well as micro businesses in United Kingdom (Business Insider, 2017). These types of organisations provide a huge amount of economic contribution in the UK. It has also been seen that the small and micro organisations contribute about 1.8 trillion pounds to the UK's economy. This is nearly about 47% of the entire contribution, which is being provided by private organisations of any nation (Paddock, 2017). In 2008 after the period of recession there is an increase of small as well as the micro organisation by 47% from the period of 2009 to 2013. Largest UK industry is in the sector of manufacturing, retail and motor vehicles repairing and 46% of these businesses are incorporated in small businesses. Thus every three from twenty businesses are falling under the category of the small and micro organisations. To achieve growth, the significant factor is to incorporate innovation in all their products and services by these types of organisations. However, it is evident from the current researchers that near about 37% of small and micro businesses have incorporated their activity of innovation that assists in fostering the economic growth as well as establish fair market competition (Paddock, 2017).

As revealed in a current statistics small as well a micro organisation employ approximately 24.3 million individuals and account for about 60% of total employment made by private organisations. This number of manpower contributed to 81% of the entire workforce is the UK. In 2016, nearly 2.5 million organisations registered to pay VAT, which accounts for 45% of entire population. Thus this registration made by the businesses can provide revenue of huge amount to the government of United Kingdom. According to the report given by World Bank by 2020 near about 600 millions for opportunities of job can be created with the help of small organisations as well as by the micro organisations.

Fig 1: Employment provided by small as well as micro organisations

(Source: Padlock, 2017)

The figure given above reflects the image of the employment rate created with the help of small as well as micro organisations within the various locations of United Kingdom.

Fig 2: Influence of small and micro organisations

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(Source: Business Insider, 2017)

The above figure reflects the clear image regarding the contribution made by the small as well as micro organisations in the United Kingdom. The first graph exhibits a percentage of various businesses for a different year. The second graph shows that turnover percentage for large, small as micro organisations for the different year. The third image exhibits that employment percentage created by small, large as well as micro organisations.

P4: Importance that small businesses and business start-ups on the development of the social economy:

The term Social entrepreneurship is considered as the procedure to utilise various techniques by various start-ups organisation for developing, funding as well as implementing various solutions, which are having high relation with cultural, social as well as environmental problems. Social Economy of a country incorporates various sorts of organisations. These organisations are non-profit organisations, co-operative organisations, organisations based on charity and various social enterprises. It has also been observed that numerous organisations are inaugurating every month, which helps in the social economy growth. Numerous social organisations are small in size as they are not having adequate fund as well as the potential and the capabilities for generating (Dees, 2017). However, it is being observed that the small organisations are contributing more towards the economy. Small organisations employ more employees, reduces the rate of crime by employing the individuals as well as contributions for GDP. Various small, as well as social organisations, are the source of income for the new entrepreneurs and they also assist the people by employing them. Thus the individual’s can maintain their family.

Part 2:

P5. By using a suitable example of an entrepreneur, determining the skills and attributes of a successful entrepreneur:

A successful entrepreneur has both personal traits like emotional intelligence and leadership attributes like motivating. However, according to Akar and Dogan (2018), an entrepreneur for being successful in the contemporary business environment needs to be visionary to identify the requirements of the market as well as to foresee the risks. A successful entrepreneur is a calculated and balanced risk taker with great personal reflection and inters personal skills. Zhand et al. (2016) pointed out one important feature of a successful entrepreneur as being self-dependent.; A person who can establish a business can run his/her family well. Regarding the market, an entrepreneur is someone who understands the requirements of the customers and comes up with an excellent business idea that fulfils the customer requirements.

Walt Disney, the founder of one of the finest animation studio and cartoon developer company, Disney in the world, can be regarded as a very successful entrepreneur. The main reason behind saying, Walt Disney, as all-time best successful entrepreneurs are that from being a farm boy to working in an art studio, Walt Disney has been able to establish his own company. The main quality he was able to identify was that of a vision for which he took the risk, indeed calculated risk to establish a small firm and then, slowly grew the business. Currently, the company is one of the best cartoon and animation studios in the world.

From the example of Walt Disney, it may seem that entrepreneurs are born made. However, according to Akar and Dogan (2018), entrepreneurial qualities are born made though they can only be developed and utilised in the real world situation.; From the last comment, it is quite clear that entrepreneurial qualities need to be developed and polished before they are being used for discovering any content or idea not developed earlier.

P6. Assess how aspects of the entrepreneurial personality reflect entrepreneurial motivation and mindset:

Several factors are there that control and change the motivational factors in different ways. The conditions are as described below:

Family motivation: There is a common belief that Entrepreneurs are mainly motivated by their family traditions, cultures and belief on Entrepreneurship. From the core level, a child gets primary inspiration about entrepreneurship from their family members. However, this saying has no logical explanation, but research counts more than 80% of entrepreneurs excelling from their familial background.; For example as stated in experience of Walt Disney who was also having motivation from his family in order to plan for Disney Land.

Cultural differences:

Cultural diversity in any country can impress and influence as well an Entrepreneur mind. These differences may generate essence of working on the necessity of people in perspective of race, ethnicity and religion. By following the different needs and essence of people from the different category, Entrepreneurs can make their business minds to uphold a new business idea for mitigating different purposes of people (Kesting and Günzel-Jensen, 2015). In case of Steve Jobs who was co-founder of Apple Inc. faced many challenges at time of managing staff due to having cultural difference among employees.

Motivation from personal influence:

From the society that the Entrepreneur belongs from, motivation can be created. There may be two different factors enforcing mind of people towards Entrepreneurship: it is either the very positive aspect and perception regarding entrepreneurship or may be personal efficacy: self-confidence towards taking challenges or making changes. Personal motivation is more influencing for a business to create magnificence. With the personal influence Sir Richard Branson who is successful entrepreneur of Virgin Media and getting motivation from himself.

Lifestyle factors:

People having special capabilities in their character like risk-taking capability or having the grandeur of changing things to a completely new version or has adventurous capability can easily take ventures toward inaugurating a new business. Hence, a lifestyle of people has also a very prominent impact on Entrepreneurs. The lifestyle factor also influence entrepreneur like that of Bill Gates owning multimillion company of Microsoft. As he was having ability to take risk so that all opportunity could be undertaken and threats could be reduced.

P7. Examine, using relevant examples, how a person’s background and past experiences can hinder or foster entrepreneurship:

Past experiences have the huge impact on entrepreneurship because it deals with multiple life experiences handled at times of crisis or complications. This exhibits the ability of an entrepreneur about taking risks in situations. An entrepreneur incredibly is in need to courageously handle customer issues, ethical and environmental issues. Racial and regional disillusionments often disturb business minds and threaten entrepreneurs in their way of expansion. A good entrepreneur should always be active, and tentative towards their service terms and policies so that they can deal with the external threats powerfully. This evokes the self-confidence of an entrepreneur upholding the number of challenges he faced at times. Erikson's life stages theory upholds the life cycle of a baby that seems to be extending towards educating themselves about various experiences gathered in the lifetime (Akar and Dogan, 2018). An entrepreneur also has the prompt tendency of attaining experiences from their families to get matured enough in adjusting themselves to the conflict situations. Education; entrepreneurs learned enough and enhance their efficiency in adapting themselves to situations and cope up with difficulties by extending adjusting capacity, enhancing self-confidence factors and self-guard. A child that is more educated and has entrepreneur background from the core is more tending to be an entrepreneur in their upcoming future life. On the other hand, belonging to an entrepreneurs’ background also help new entrepreneur have financial support and mental support both with sharing of earlier incidents generating more ideas and knowledge at all. Like Steve Jobs was having enough knowledge and passion which formed him to build up computer so that it could make working of people easy. So this experience was helping in hindering his views and planning to form one of the best rated products and company of all times.

Culture also plays a diverse role in conceptualising a new business on the onset of the present market scenario. This ambience also sets live experiences in entrepreneurs' mind to be more adaptive to situations and obstacles enabling them to get more attitude about further life. There are differences in culture, values, ethical practices, religious cultures, traditions and norms in countries (Dees, 2017). These factors generally influence the entrepreneurs from various aspects: hampering their way of making business terms and communications with parties and countries as well. Walt Disney started his career with having very little fund or amount to start one of the biggest Theme park. As per the past experience of Richard Branson it was noticed that once in his school time his Headmaster included that in his coming future either he will be end up in prison or become a millionaire.

There is high influence of personality-based traits in entrepreneurship: people who can take risks and responsibilities in a very straightforward manner and has efficacy in holding up confidence even in the turmoil situations, get additional benefit and success in entrepreneurship. However, the globalised era has set a challenging impact and influence of financial capability in attempting to any business effort which gets prior attention and succession to all (Akar and Dogan, 2018). The market saturation and crisis of financial resources also have potential impact in the entrepreneurship. Thus, handling of such situations enables entrepreneurs to get live experiences and create omnipotence to deal with critical situations. Bill Gates was having greater chance of taking risk and responsibilities so this was also shown up into his entrepreneurship as well.

Conclusion

It is inferred from the report that the large organisations employ numerous people. However, it is seen that the medium, small and the micro organisations are also having the significant contribution to the enhancement of global economy as well as for a country's economy. Therefore, the small, as well as micro organisations, are also contributing to enhancing the GDP of a country. Therefore, if an entrepreneur is starting a new business, then they must start with medium or small scale organisation as it requires small revenue and few human resources.

Reference

  • Akar, H. and Dogan, Y.B., 2018. The Role of Personal Values in Social Entrepreneurship.;Universal Journal of Educational Research,;6(1), pp.83-90.
  • Alvarez‐Garrido, E. and Dushnitsky, G., 2016. Are entrepreneurial venture's innovation rates sensitive to investor complementary assets? Comparing biotech ventures backed by corporate and independent VCs. Strategic Management Journal, 37(5), pp.819-834.
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