There are three characteristics which distinguish the entrepreneurial venture from the small business, innovation, potential for growth and strategic objectives, explain why the Entrepreneurial venture is distinct from the small business?
A small business has several unique characteristics that differentiate it from a large business. The differences include aspects of ownership, management, resources, organizational structure and flexibility to changes.
Small business entrepreneurs are mostly owner-operators. In order to manage a small business efficiently, an owner-operator needs to understand and be able to apply management functions.
Managerial functions of owner-managers include planning, organizing, leading and controlling. A small business develops through stages from start-up until it grows and expands into a formal organization. During these stages the owner-manager of a small business will usually shift his focus in terms of time spent on attending to activities of operation in the early stage to managing activities as it grows into a more formal and structured entrepreneurial venture.
The owner-operator and his managers need to pay attention to structuring the organization for it to function efficiently. Entrepreneurial venture can be structured based on work shifts, number of workers, functional, product, regions and clients.
The owner-operator needs to pay attention to personnel development in order to have a motivated and productive workforce. Personnel management includes personnel planning process, recruitment process and development of a remuneration and compensation package. The owner-operator needs to adhere to government regulations on employment such as compulsory contribution to EPF and SOCSO. In addition, both the employer and employee should be familiarized with the Employment Act 1955.
Difference between Entrepreneurial Venture and Small Business:
Large corporations and educational institutions
Managers and administrators
Judgment in the market place
Judgment by superiors Management style
Hands-on: personal attention
and “home-made procedures;
Delegation: use of control systems, procedures, and manuals
Identical to the entrepreneur’s
Rate of return to investors or
meeting the budgetary
requirements in the case
Idea mostly generated by Owner
Research & Development Team Potential for Growth
Ability to pool resources. Eg: Selling its shares to the public
in order to raise huge capital (IPO).
Why existing businesses leave gaps in the market and consider why there will always be gaps in a market that the entrepreneur can exploit, despite the presence of established business?
Despite the presence of established businesses, the market will definitely leave gaps which can be exploited by the entrepreneur. Business opportunity is said to exist when there is room to offer a product or service in a particular market which fulfils customers’ demand and preferences.
There are two situations in which a business opportunity can exist in the market:
a) When a product is already available in the market, but does not fulfill fully the demands and preferences of the customers. This may be due to low quality, poor performance, the product not being user friendly, unreasonable priced, difficult to get or has unimpressive features.
b) Situation is when the customers require a product or services that can help to solve their problems, for instance, a product that can speed up the process of work with less effort such as software that expedites office work or hotel services for which could offer accommodations for tourist....
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