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Introduction
Do businesses fail?
Startup businesses have a very high failure rate in
most countries with as many as 1 in 3 failing in
their first three years. The reverse side of the coin
is that around two thirds survive and some go on to
prosper and expand. Key reasons for business
failure include:
• Poor planning
• Lack of experience
• Lack of finance
• Cash flow problems
• Failure to embrace new technologies
and new developments
• Poor choice of location
• Poor management
• Poor human resource relations
• Lack of clear objectives
Quote
"Success is often achieved by those who don't know that failure is
inevitable" - Coco Chanel
Micro, small and medium-sized enterprises face particular problems due to their small
size and limited resources. Starting up a new business and getting the required capital is
a challenge, as is finding the right kind of finance to expand an established business.
Due to their limited resources, they suffer more from red tape and administrative
burdens than larger enterprises. They often struggle to keep on top of new
developments in information and communication technologies, and encounter difficulties
finding qualified staff as well as providing them with adequate training and education.
Moreover, finding successors for retiring business owners can also be problematic.
These challenges are not new. However, broad economic trends such as globalization of
the economy, technological progress and the trend towards a more knowledge-based
economy as well as the enlargement of the EU and the completion of the internal market
have considerably changed the challenges that SMEs face today. SMEs in the EU
observe that competition in their markets has increased over the past two years.
According to the 2007 European SME Observatory Survey, 60% of managers stated that
competition has recently intensified. In response to tighter competition, the primary
strategy of SMEs is to put more effort into the quality of products and marketing as the
SME Observatory Survey illustrates: 64% would improve their product (or service)
quality, 62% would increase product differentiation, and 61% would increase marketing
efforts in response to increased competition. Interestingly, cutting costs is only the fourth
most popular strategy adopted by SMEs in an effort to keep up with tighter competition.
Source: http://www.enterprise-
europemalta.com/Portals/0/documents/FINAL_REPORT_(2)[1].pdf (Accessed:
10/03/2013).
At this point, please access YouTube and watch this very interesting video on the
importance of SMEs in the digital economy:
(http://www.youtube.com/watch?v=haGaRF_SB2k)
Main Analysis
Micro enterprises, many of them craftenterprises, are the real pillars of the
Europeaneconomy. The vast majority (over 90%) aremicro enterprises with fewer than
ten persons.They alone employ more than one third of the European workforce and
produce morethan 20% of economic value added.
Self-employment, i.e. an enterprise with only one employee, accounts for 16% of
totalemployment in the EU.
Medium-sized enterprises employ about 21 million people, i.e. nearly 17% of the private
European workforce.
What is an SME?
Companies classified as small and medium-sized enterprises (SMEs) are defined
officially by the EU as those with fewer than 250 employees. Furthermore, their
annual turnover may not exceed €50 million, or their annual balance sheet
exceed €43 million. SMEs may be divided into three categories according to
their size: micro-enterprises having fewer than 10 employees, small enterprises
have between 10 and 49 employees, and medium-sized enterprises having
between 50 and 249 employees.
Who is an entrepreneur?
Over time, scholars have defined the term in different ways. Here are some
prominent definitions.
1803: Jean-Baptiste Say: An entrepreneur is an economic agent who
unites all means of production- land of one, the labour of another and the
capital of yet another and thus produces a product. By selling the product in
the market he pays rent of land, wages to labour, interest on capital and what
remains is his profit. He shifts economic resources out of an area of lower
and into an area of higher productivity and greater yield.
1934: Schumpeter: Entrepreneurs are innovators who use a process of
shattering the status quo of the existing products and services, to set up new
products, new services.
1961: David McClelland: An entrepreneur is a person with a high need for
achievement [N-Ach]. He is energetic and a moderate risk taker.
1964: Peter Drucker: An entrepreneur searches for change, responds to it
and exploits opportunities. Innovation is a specific tool of an entrepreneur
hence an effective entrepreneur converts a source into a resource.
1971: Kilby: Emphasizes the role of an imitator entrepreneur who does not
innovate but imitates technologies innovated by others. Are very important in
developing economies.
1975: Albert Shapero: Entrepreneurs take initiative, accept risk of failure
and have an internal locus of control.
1975: Howard Stevenson: Entrepreneurship is "the pursuit of opportunity
without regard to resources currently controlled."
1983: G. Pinchot: Intrapreneur is an entrepreneur within an already
established organization.
1985: W.B. Gartner: Entrepreneur is a person who started a new business
where there was none before.
A top ten for business leaders Nov 26th 2012, 11:01 by J.A.
Thomas W. Malnight and Tracey S. Keys, IMD business school in Lausanne and his
colleague Tracey Keys of Strategy Dynamics Global.
The great global redistribution of economic and social power will continue over the next
12 months. Power will flow away from traditional institutions that have failed to deliver
progress – especially governments and banks. It will flow towards communities and
individuals, and also to businesses whose leaders understand and act on the big trends
shaping our future.
This future looks uncertain and unstable. Hurricane Sandy was a deadly reminder of
shifting climate patterns, emphasizing the need for new ways to manage the world‘s
resources and environment. There are growing levels of social unrest over rising
inequality, austerity, unemployment, political ineptitude, institutional failure and more.
And companies will continue to fail because they misread the future - like Kodak, which
invented the digital camera but filed for bankruptcy after focusing on its core film
business instead.
In our new Global Trends Report for 2013, we highlight 10 trends that business leaders
need to focus on today. These are:
2. Redefining value: The consumer is winning the fight to own the new
consumer
The notion of value is being redefined for the 21st century. Consumers have
choice. They want personalization, and to participate in value creation, shifting
the mindset to ―made with me.‖ Value will also be about ―shared with me‖ as the
ownerless economy expands. This will be driven particularly by younger
generations who value experiences they can share – and that also deliver
benefits to society - over possessions.
5. The new space race: Pushing the frontiers of technology once again?
Scientific advances from national space programs have had a significant impact
on how we live and work, from advanced materials to global telecommunications.
Now, commercial space travel and exploration is a reality, even as a new space
race hots up, particularly between the US, China and Europe. New advances will
surely result, as will questions over the ownership of space ―assets,‖ and whether
advances will be shared for public benefit.
Like any big shift, the dispersion of economic power presents challenges and
opportunities. Are you and your business ready to take advantage of these 10
trends?
Source: http://www.economist.com/blogs/theworldin2013/2012/11/global-trends-
2013 Accessed: 15/04/20213).
Think Theory 1
Dream vs. Vision: A Mind-Shift For Visionary Leaders by: Michael Skye
Editor's Note: Whenever one talks about leadership or strategic planning, there's
always lively discussion about what a vision (or vision statement) is, and how it
differs from other related topics. This article examines the difference between a
vision and a dream.
The vision you see when you are awake and looking at reality with your eyes is a
metaphor for the kind of thinking that happens when you look to your future with
your mind's eye. The inner world (past, present and future) you see is built from
your own assumptions or metaphorical constructs. With this kind of vision, you
can "look" down different paths, and "see" what would happen.
When we speak of dreams and vision in this article, we're referring to the dreams
and vision you see inside your mind while awake. We all have such dreams and
vision; and both are an integral function of human consciousness.
For visionaries, vision is a major source of power and conscious guidance - and
it's something they consciously control. For others, vision is a major source of
fear and default guidance - and it's something to which they unconsciously react.
To be a visionary, and thus have a higher level of inner power to change and
create the world around you, one must learn to live at the level of vision.
ORIENTATION:
Dream - What you see when you are imagining a hypothetical scenario.
Vision - What you see when you look to the future without hypothesizing, wishing
or imagining.
EXAMPLE #1:
Imagine that you're on vacation at the Grand Canyon, and you're standing on the
edge of the cliff with your binoculars, looking far off into the distance. Suddenly,
on the other side of the Grand Canyon, you see what looks like a jet, and a man
in a suit standing by the jet. Then all of a sudden, the man's hair just kind of flips
sideways up into the air. And you think to yourself "Wait a minute, is that Donald
Trump?"
Just then you remember he's doing a new reality TV show called "Who Wants My
Money," where he goes to an obscure public location and holds up a sign that
says, "Who wants my money?" and then gives one million dollars to the first
person to reach him. "No, can't be The Donald," you're telling yourself, when it
happens - the sign goes up - it's him!
In that instant, you realize "I could win the money!" and you turn to bolt for your
car just in time to see everyone else heading for their cars. In that moment, you
remember you came on the bus. You turn back and look over at Donald there
with his sign, and you dream about winning that money. It's an exciting dream,
but it's not very real. You won't win the money.
Then you hear it. That sound... behind you... it's... your helicopter. You turn
around and see your pilot, who will take you anywhere you want to go. Then, in
that instant, you turn back around with a smile, you look at Donald Trump and
you know that money is yours. You're already spending it in your mind.
So, there's a big difference between a dream and a vision. A vision has a power
that a dream doesn't have.
EXAMPLE #2:
Let's say you have a personal dream of being a public speaker one day. Every
time you get the opportunity to speak in public, whether it's among friends, in
classrooms or at events, you feel a little too nervous to speak. It doesn't seem
like you're ready yet, and you turn away. After several months of this, you look to
your future and what do you see? You don't really see yourself speaking
powerfully in the world. You can dream about it all you want, but you can't really
see it happening.
Now let's say you come to a point, where you realize your dream is dying and it
becomes very painful. You become very clear how much the dream means to
you, and you take a hard look at the fears and the challenges of becoming a
public speaker. You realize that there are values worth standing for to face those
fears and walk that path. You take a stand for the lives of the people you want to
reach with your speaking. The next time you are presented with an opportunity to
speak, you are terrified, but you stand up and you speak. And the next time, you
are scared once more, but you stand and you speak. Soon, you look to your
future and you see it--you're speaking around the world. It's not a dream
anymore, it's your future. A public speaker is who you are.
A KEY POINT:
Consider that the "inner" vision we see guides us as much as, if not more than,
the "outer vision," or what we see with our eyes. What we see internally gives us
our interpretation of the world out there. Whether we walk down one path in life
or another is often determined by what we "see" when we "look" down those
different paths--and what we then "feel" as a result.
Based on what we see and feel, our logical, we then makes our choices--
supported with seemingly rational justifications. What we often fail to realize is
how the context for our choices are already given to us by our vision.
To the extent that we can take control of our vision - or live at the level of vision -
we can have much more power to lead our lives and create what we want in life
and with others - as visionaries.
VISIONARY ADVANTAGE:
A skilled visionary, the kind of person who thrives in an ever-changing
environment, operates fluidly and openly with the world around her. She doesn't
cling to any static or prepackaged view of reality, because she operates on the
level of vision. She is a leader, who leads from the power of her own vision.
VISIONARY DYNAMICS:
The more you understand the dynamics of vision, the more you can consciously
choose to function at the level of vision--beyond positions, beyond reactions,
beyond fear.
The more you practice visionary thinking, the more you naturally operate at the
level of vision.
VISIONARY CHALLANGE:
Honestly reflect on your life to see in which areas you are not living powerfully
and passionately from a bold vision. In such areas, dramatic positive change
seems impossible, impractical or not worth the effort. With a vision, dramatic
positive change occurs not only as possible, practical and worth incredible effort--
but as "all there is to do." A powerful vision calls you naturally into heroic action.
About Author: As founder of the Vision Force Academy, Michael Skye works with
a new breed of impassioned change agents around the world, who are giving
their lives to stand for all of humanity. Michael is best known for his
transformational leadership trainings, based on his proprietary iStand technology.
He authored the the <i><a href="http://www.visionforce.com/course/"> Visionary
Mind Shifts</a></i> for <a
href="http://www.visionforce.com">VisionForce.com</a>.
Article Source: http://www.articlesalley.com/
Vision examples
IBM focuses on two overarching goals –helping clients
succeed in delivering business value by becoming more
efficient and competitive through the use of business insight
and information technology solutions and providing long term
value to shareholders.
Microsoft‘s mission is to help people and businesses
throughout the world realize their full potential.
The following essay have been written by students for you to use to help you with your
studies. There are interesting discussions regarding the applicability of the western
theories in the Tanzanian cultural context. The main subjects of the discussions are the
following:
Discussion of hypotheses
Hypothesis 1: Demographic characteristics
Furthermore, we did find that the carpentry education has positive implications
for SMEs growth in terms of both sales and asset. This finding suggests that
carpentry education obtained from various vocational training colleges in
Tanzania has an impact on the formation and growth of SMEs. For this reason,
we can also conclude that the right things are taught in the program offered by
various vocational training colleges. Thus, our results are consistent with
previous research, which has documented that vocational training education
influence the formation and growth of SMEs(Pankhurst 2010). This study is also
consistent with an African study conducted by (McPherson 1992) in which was
found that entrepreneurs with vocational training had firms that grew 9.0 percent
faster than firms run by entrepreneurs without such training.
The variable family background is one of the great interests in the research
literature. It is suggested that individuals whose parents or close relatives
were/are self-employed are not only likely to operate a business, but also to
outperform others (Stanworth et al. 1989; Papadaki and Chami 2002). In this
study, we also found that the majority of the owner-managers in our sample
came from an entrepreneurial family. Furthermore, we found that owner-
managers who came from entrepreneurial family backgrounds are more likely to
experience growth in their businesses than people without such a background.
This is consistent with the contention that children of entrepreneurs are more
likely to form successful businesses than children of other people (Storey 1994;
Papadaki and Chami 2002; Shane 2007). These owner-managers are more likely
to be successful in their business because they had been raised in an
environment that facilitates a process of human capital accumulation. Indeed,
entrepreneurs raised in the entrepreneurial family background are aware of the
challenges they will have to face and are better prepared to seek and give
solutions to the problems that will arise (Meccheri et al 2005). Apart from the
knowledge accumulation, they may have easier access to informal and formal
networks of suppliers, clients and venture capitalists, of which they can take
advantage. For instance, we found that the majority of the owner-managers
raised in an entrepreneurial family claimed to be involved in various informal
networks (See appended Table 0 -4 and Table 0 -5).
The findings that carpentry education and managerial experience are not related
to employment growth were unexpectedly given a prominent role played by the
aforementioned factors on SMEs growth. With respect to the carpentry education
it is possible that most of the owner-manages who have received carpentry
education feel reluctant to employ an additional worker. Since these owner-
managers have carpentry skills, then it could be possible that they don‘t need an
extra carpentry skill through hiring employees who contribute their skills. Perhaps
these owner-managers employ an additional worker after a long period of
accumulating assets and revenues, which increase operations of enterprise and
therefore, demand for more workers. Furthermore, it is difficult to explain why
managerial experience was not significant related to the employment growth. The
possible reason for this result could be largely attributed to the methodological
approaches used. This might be an indication that the factors affecting sales or
assets do not necessary affect employment growth. For example, Delmar (1997)
examined both growth in sales and in the number of employees and found out
that the factors affecting sales were not always the same as those affecting the
number of employees. Jansen (2009) and Shepherd (2009) also shared a similar
view by suggesting that sales and employment measures are not
interchangeable criteria for measuring the growth of SMEs. Alternatively, with
respect to the carpentry education it is possible that most of the owner-manages
who have received carpentry education feel reluctant to employ an additional
worker.
Furthermore, we did find that the tendency of taking risks has positive
implications on business growth in terms of both sales and assets.
However, we did not find any significant association between the tendency of
taking risks and employment growth. This suggests that owner-managers in our
sample may have a higher tendency to take risks in other business outcomes
such as sales or asset growth rather than on promoting employment growth.
Alternatively, it could be concluded that the factors which affect sales or assets
do not necessary affect employment growth.
Contrary to the findings from previous studies, our empirical findings show that
tolerance for ambiguity has a negative effect on sales growth. The finding
suggests that those owner-managers who scored low on this trait were
performing well. On the other hand, those owner-mangers who scored a little bit
high on this trait were doing badly. However, this result should be read with some
caution, because the negative significance could mean serious consequences to
the high number of individuals who, in our sample, had a low level of tolerance.
Indeed, the majority of the owner-mangers in our sample scored below the mid-
point 3 in this trait. Alternatively, the possible reason for this result could be
attributed to the fact that the scale which used to measure ambiguity tolerance
lacks face validity. Actually, the measurement scale for tolerance for ambiguity
had a low reliability coefficient (Cronbach‘s alpha 0.6). On the other hand, it could
be that these measures do not capture the tolerance that is conceptualised by
the owner-managers of the growing firm. Other explanations for this
inconsistency could be that ambiguity tolerance may affect how individuals
respond to uncertainty situations, but it may not positively affect the growth of
SMEs.
The first sub hypothesis with regard to cognitive characteristics dealt with the
owner-manager entrepreneurial alertness. In research and literature it is often
argued that a high level of entrepreneurial alertness provides entrepreneurs with
that increased ability to recognize successful opportunities that leads to business
growth (Gaglio and Katz 2001). The results in this study seem to support this
argument as we found that high levels of entrepreneurial alertness are related to
the growth of SMEs. Our empirical findings also suggest that low levels of
entrepreneurial alertness hamper the growth of SMEs. This result also supports
previous findings that pointed out that individuals with low alertness are more
likely to be unaware of the opportunities that may lead to future profits (Olomi
2001).
The next sub-hypothesis dealt with the attitude towards entrepreneurship. Two
factors were used to measure owner-manager's attitudes towards
entrepreneurship. These include: a positive attitude towards venture creation and
growth and a positive attitude towards risk taking and uncertain situations. In
general, our results suggest that attitude towards entrepreneurship has a
significant positive effect on a firm‘s growth. Specifically, the hypothesis results
regarding positive attitudes towards venture creation and growth are supported
by all growth measures used in this study. In other words, the majority of the
successful owner-managers strongly support the view regarding continued
search for growth. This result supports earlier findings that point out that owner-
managers‘ attitudes towards business growth are the key factors for successful
business (Davidsson 1989; Delmar, Davidsson, and Gartner 2003). Further,
positive attitudes towards risk taking and uncertain situations were only related to
sales and asset growth. This finding suggests that successful owner-managers in
our sample are inclined to involve their business in situations that may consider
risks. In general, this finding suggests that attitude towards entrepreneurship is
not only a good predictor for business creation (as already mentioned by
previous studies), but also a good predictor for firm's growth. In fact, this finding
adds to the growing body of research that focuses on understanding the
relationship between attitudes towards entrepreneurship and firm performance
(Baume, Locke and Smith 2001; Baum and Locke 2004; Rauch and Frese
2007b)
Furthermore, it was found that push factors (or negative motivators) were not
very important when starting one‘s own firm in Tanzania. This finding suggests
that most entrepreneurs in Tanzania are generally motivated by pull factors. This
is consistent with other previous studies, which suggest that most of the
entrepreneurs are motivated by positive reasons (Mitchell 2004; Kirkwood 2009).
However, it contradicts earlier findings that claim that push motives are more
important than pull motives in developing countries (Chu et al. 2007; Benzing et
al. 2009).
http://www.lawteacher.net/family-law/essays/entrepreneurship-and-the-growth-of-the-
smes-in-the-manufacturing-family-law-essay.php
Implicit in these discussions is the assumption that the new venture has a well-
focused target market segment. Analyses of the opportunity thus become dependent
upon the specific behaviors of a well-defined market segment. The viability of the
new opportunity will involve an in-depth analysis of the demographics of the
marketplace, the nature and behavior of the competition, the envisioned competitive
advantage of the proposed venture, and the identification of the competitive vacuum
which will create the opportunity.
In evaluating an idea for its potential value as a business opportunity, it is important
to identify all the relevant risks and to evaluate these risks in terms of: (1) the
possibility that some risks may be eliminated through proactive strategies, (2)
spreading the risk where possible, and (3) managing risks that are considered worth
incurring. Risks include market or competitive risks, financial risks, and technical
risks. Risk analysis is conducted to answer the overriding question: Can the
entrepreneur and the entrepreneurial team make it happen?
Think Theory 2
Think theory 1
Some of the main factors will be influenced by the economic crisis are the
following:
Consumers – will become more demanding searching for alternatives will give
them higher value for money.
Competition – will become more intensive, will struggle for survival. Price wars
will be difficult to avoid.
Human resource market – will offer greater opportunities for talents which will
look for challenging roles and work harder for achievement.
Think theory 2
Your organization won't innovate productively unless some underlying factors are
in good shape. If "10" is outstanding and "1" is poor, how do you rate your
organization on each of these?
8. Willingness to take risk and see value in absurdity. Albert Einstein once
said, "If at first an idea doesn't seem totally absurd there's no hope for it."
Innovators understand that you have no choice; you must take risks, often big
ones, by moving toward the absurd, the "seemingly" irrelevant, in order to create
pre-emptive competitive advantage while competitors move in the "obvious"
direction.