Management Skills And Entrepreneurship

Published Date: 02 Nov 2017

Introduction:

This research focuses on Entrepreneurship. Sarasvathy defines entrepreneurship as "The capacity and willingness to develop, organise and manage a business venture along with any of its risk to make a profit". The most obvious example of entrepreneurship is the stating of new business. (Sarasvathy, Saras D. 2008)

Sometime ago, two terms of different styles of entrepreneurship were introduced called Causation and Effectuation.

In the field of decision-making Effectuation is a relatively new theory of entrepreneurship research. Entrepreneurial process is an inverse of the classical causational process. Many scholars have written different books on this concept but in my assignment I will use ideas and concept of one particular person her name is Sarasvathy. She explained these two terms causation and effectuation in a very nice way. (Sarasvathy, Saras D.  2001) defines that causational process "take a particular effect as given and focus on selecting between means to create that effect", while defining that effectuation process "take a set of means as given and focus on selecting between possible effects that can be created with that set of means" (Sarasvathy, Saras D.  2001a)

She has also given different examples to explain this concept in good way and clarify her statement and difference between causation and effectuation. Using her example which she established in her dissertation (p.245): A chef is invited to prepare dinner for a host. The causal process means that the customer chooses a menu where the chef shops for ingredients and cook. Therefore, the end is predictable and gives emphasis on acquiring and selecting one of the means to reach the end. The effectuation means that the host asks the chef to think a menu based on the available resources in the kitchen. Hence, the resources are given and focus is on what can be done with them.

Nowadays mostly entrepreneurs use effectuation model rather than causational model that’s why effectuation model continuously gaining foothold in the field of entrepreneurship research.

According to Sarasvathy theoretical framework. Effectuation "inverts the fundamental principles, solution process and overall logic of predictive rationality" (Sarasvathy, Saras D.  2001a)

It is argued that effective mechanisms associated with the discovery and exploitation of opportunities in new markets with high levels of uncertainty (Sarasvathy, Saras D.  2001) for this reason, Sarasvathy suggests that the success of the first participants in a new industry is more likely to use the process of achieving causal processes. Because the effectuation and has a sophisticated design and prediction, the costs associated with these activities are reduced (Bhide. 2000; Mintzberg. 1994). Sarasvathy (2001) argues that while new businesses fail created by effectuation model, they will fail in initial levels and / or lower investments than those businesses which created through the causal model.

Implementing the theory based on the decision of the literature suggests that if decision makers believe that it is a relatively unpredictable, they will try to gather information about the future trends of experimental, iterative learning (for example, Ries, 2011).The elements of effectuation help us to reconstruction experimental and iterative learning techniques that allow entrepreneurs to discover information about the future as time passes.

(Sarasvathy, Saras D.  2001).

Sarasvathy describes succinctly the difference in the two logical modes:

Causality problems are decision problems, effectuality problems are design problems. Causal logics helping us in choose while effectual logics helping us to construct. The causal actor begins with an effect he wants to create and asks, "What should I do to achieve this particular effect?" The effecutator begins with her means and asks, "What can I do with these means?" And then again, "What else can I do with them?" (Sarasvathy, Saras D.  2008)

The study showed that the two methods differed by five factors

Resource driven objectives

The first and most definitive part which separated experts from novices was how they began the process of making decisions to create a business. (Sarasvathy, Saras D.  2001a).

The beginner started with a business plan (with corresponding targets) and market research. Business expert’s entrepreneurs, meanwhile, made three key issues:

1) Who am I?

2) What do I know?

3) Who do I know?

To do this, the employer is strictly inventory of resources. What services or goods, the employer already know how to deliver? When asked who the employer has identified these things were more passionate. Finally, the most extreme effectuators always started with what he knew well, could begin to build partnerships. For example, one participant said:

The traditional market research, he says, based on a broad collection of information, perhaps via e-mail. I would not do that. I literally would seek, as I said at the beginning, company key star call; do a frontal lobotomy on them. . . The challenge is to actually choose your partners and yourself early package before you have to put a lot of capital. (Sarasvathy, Saras D.  2008).

This line of thinking is very similar look with Napoleon. As in the Battle of Toulon (Note 1) Napoleon had decided to conquer these strategic resources to rigorously examine and their position. (Duggan 2009)

Similarly, entrepreneur’s resources expert study before making a decision.

Minimizing losses rather than focusing on returns

The second element is that entrepreneurs like to spend only what they could afford to lose. (Sarasvathy, Saras D.  2008). In contrast, novices focused on the amount that can be expected in return. Ends effectuators not want to spend money. He was careful in spending money on marketing. An entrepreneur may even sell a product that was not available to the client. He built only after the customer wanted to buy. (Sarasvathy, Saras D.  2008).

Forming partnerships

The third element is that the business experts differ from novices focusing on partner search. First, he tried to quickly turn customers into partners - which come in their new business. Second, unlike novices - who focus on competition, experts are diligent in building associations.

Refining the service or product based on customer feedback

The fourth element is that entrepreneur’s specialists recognize that the initial product is not where it should be. (Sarasvathy, Saras D.  20018).

When applying iterative information for customers about your product or service, the entrepreneur has the ability to transform. Thus, the contractor is not an expert to say a fixed idea of ​​what the market needs. Instead, the entrepreneur and the dialogue with the market to determine what the market wants. (Sarasvathy, Saras D.  2008).

Arriving at a different destination

The fifth and final point is that entrepreneur experts do not have a fixed goal or destination. For example, unlike the classic strategic model, the journey from A to B is often converted into a journey from A to C, where C is unthinkable death or diversion. Two thirds of the study participants, eventually selling products or services that is different from their origin. (Sarasvathy, Saras D.  2008).

This is another look resonate with Napoleon.

Map of Napoleon's final battle and the strategic points have changed their plans before the battle. Similarly, when employers use guidance based media must change their original plans of the dynamics of resources, knowledge, alliances, customers and environmental changes. (Sarasvathy, Saras D.  2008).

EXAMPLES

Following are the examples of effectuation model businesses.

Ebay.co.uk

Kelkoo.co.uk

Gocompare.com

Facebook.com

Zara

Gap

Auto trader

Ali baba

Conclusion

The debate is whether the new businesses that are placed or made complete; I do not think so. However, we hope that this study will encourage researchers to consider three important aspects such as promoting their research. The first is to know that the weight of the theoretical foundations on existing works. We were surprised by the emphasis on the position of the company's research centre. We asked ourselves what other researchers now consider cases data on the historical foundations of his work. We are not saying that all of these assumptions may be lost or badly - can only be a good time to catalog and devotion assessing the cases to be aware of biases that might accompany them. The second is to appreciate the wealth of data contained in the dusty volumes of past work. We believe that many new ideas can take advantage of a first examination of the export related structures from the literature using the method we have created for this study. And the third is to incorporate the ability to create can cause some boot process. This can be a key to enable our community to define and communicate the distinctiveness of entrepreneurship.

REFERENCES

Bhide, A.V. (2000). The origin and evolution of new businesses. New York: Oxford University Press.

March, J. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.

Mintzberg, H. (1994). The rise and fall of strategic planning. New York: Free Press.

Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses. New York: Crown Business.

Sarasvathy, S. D. (2001a). Causation and effectuation: Toward a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243-263.

Sarasvathy, S.D. (2001). Causation and effectuation: Towards a theoretical shift from economic inevitability to entrepreneurial contingency. Academy of Management Review, 26(2), 243–288.

Sarasvathy, S., (2008). Effectuation: elements of entrepreneurial expertise. Northampton: Edward Eglar Publishing, (Chapter 2-3).

Wiltbank, R., Read, S., Dew, N., & Sarasvathy, S. D. (2009). Prediction and control under uncertainty: Outcomes in angel investing. Journal of Business Venturing, 24(2), 116-133.

Notes

Note 1. In Toulon, Napoleon had an option of choosing between the main fortresses that the British occupied or smaller ones. Counter to his general’s logic, he chose the smaller ones because his lessons from Joan de Arc and George Washington taught him that the garrison could be driven out by conquering the surrounding smaller fortresses. (Duggan 2009).

TASK 2 http://t3.gstatic.com/images?q=tbn:ANd9GcRn6M1glzviisLJEgYvPowANyuJ9CfIVmESHPwA6iHfMsvoGyPyUg

Marketing Plan in New Product

Our company intends to introduce a new product. If you have all the information through interviews and have knowledge of the market, customer demands, needs and desires. This information helps us learn more about the current market and the prospects for our new product.

Executive Summary

We want to market Mahseer fish. We have prepared this appropriate plan on that basis. We have given a name for the product as "Himalayan treat". Since the Mahseer fish are very much available in our country (Pakistan).

Himalayan treat is a product that provides the consumers with processed Mahseer fish in packets. We have decided to launch two product lines for market purpose. The Himalayan treat would be launched in the market at double fillet and half kg packing.

To get customer interest and attention we have set affordable price. We have followed the Target Costing pricing approach. Our product is fresh and new product in market so we would easily gain competitive advantage. We have chosen a huge part of the market for the product. United Kingdom is a large population. Many people looking to buy a product on a daily basis. Quality fresh fish Mahseer is not available throughout all time. For example: a person eats fish and looking for freshwater fish, it will not be easy for them to find it easily. Mahseer quality fresh fish is not available in all stores in the United Kingdom. If we launch the product in the market, a wisher to eat fish Mahseer can easily get it in a store nearby him. The target market includes our health conscious people, sports staff, people who suffer from health problems and many other consumers; we have segmented the demographic, geographic location, Psycho graphic and behaviour. (Davendra, S. 2007)

For our new product we have done all financial documentation. As we are introducing the product in two categories at Double fillet and Half kg packets, we have done the Target Profit Analysis for each of the product line. We have prepared the plan on five-year basis. (James,G. 1977)

If we sale our product line1 (double Fillet) at about 4158004 units a year, neither we will make profit nor loss. For making profit we have to do something by with we can get market demand and sold more than 4158004 Units per year. As we know, eventually the unit cost will come down because of Marginal cost law. And this effect also Break even analysis will come down. This was for the long term perspective. In the beginning might be we suffer with loss but at the end we would get enough profit. We will firstly introduce double fillets in the market that consumers taste the product. Might be we gain some profit from them.

Our Product line2 (half Kg) is 4914004.914 units per year. But our aim would be to sell more than 4914004.914 to make a profit. After a big promotion of a product people will consume more of Half Kg product line and there would be more demand of this product line. As compare to price of double fillet product line we will sell Half Kg product line in low price.

We have given detail discussion on financial summary at the later stage of the appropriate plan. We have used the Target Costing Pricing Policy; which means that an ideal price first established based on assessment of clients, the cost of destination shall ensure that the price has been achieved. We decided that the purchase price before. We then calculated the estimated unit price and the fixed price. We decided to label each line of products. We assigned two different margins for the two product lines. Pricing is based on market research.

http://t2.gstatic.com/images?q=tbn:ANd9GcRJ9HUDNkNOu7vVNcKWjKer-FluIwZrwbVfTyAGqSYsvyklGh84uA

1. Product Description

1.1 Product Portrayal

‘Himalayan treat’ is a product that serves different types of customers. In current market our product Mahseer fish is unique. The Mahseer fish will be processed and sold in packets of convenient size of double fillet and half kg. If we can see our target market is very high because of different aspects. The sale which we are expecting is very high. Our cost of development is £2.5 million approx.

1.2 Product Profile

Name of the Product: Himalayan treats

Type of Product: Fresh water, Mahseer fillets

Ingredients: fresh water Mahseer, highly rich in Protein.

Container: Stylish plastic packaging.

Container size: double fillet, half kg.

Product Price: Double fillet for £3.99

Half kg for £6.99

Estimated Expiry: Two Months.

Machinery used: Standard health and safety packaging measures.

Brand Slogan: the taste of the wild...

2. Market Research and Analysis

Our company intends to introduce a new product. If you have all the information through interviews and have knowledge of the market, customer demands, needs and desires. This information helps us learn more about the current market and the prospects for our new product. (Donald, R. 1989)

.

2.1 Market Description

United Kingdom is a country of about 63.2 million people. The total market size of the fish industry is about 20 million and it is increasing day by day. For different products we have different market hold worldwide. Nowadays people are very aware about market and product condition. So we have a great prospect of customers of "Himalayan treat". According to our analysis few types of customers will most prefer to buy our product. (Figures from internet)

2.2 Market Segmentation and Targeting Market Segments

We observe and analyze the market and depending on the nature of the market that the market segmented in the following areas:

Geographic Segmentation: http://t1.gstatic.com/images?q=tbn:ANd9GcScOsg5O2LwYxGmleAeqFGoY2zx4Gl_-bbXNgh9CR-elg1hwacq

London

Edinburgh

Cardiff

Belfast

Dublin

Demographics: http://t3.gstatic.com/images?q=tbn:ANd9GcTSi4sm9pfdxc2DYhiaBPTbQJLTWDh1rDkIqOV_92i_qJYVdNpF

Individuals

Family

Fisheries

Poultry

Super markets

Psychographics:

Higher class

Higher mid class

Middle class

Behavioural:

People suffering from health issues

Health conscious

Sophisticated consumers, who try new products from the market

Sports personnel’s

Target market and projections:

After doing all analysis, we have set our minds and targeted market with our product lines. The target customers of "Himalayan treat" are sick people, health conscious people and tourists. The company decided to charge £3.99 for Double Fillets, £6.99 for Half Kg. The prices are reasonable for our both product lines because if we assume price verses taste received then we can say that value of taste received is more. It is justice with customer to charge them the mentioned price. The following percentages give a clear idea of our target market.

 

Target Market:

Health Conscious - 43%

Unhealthy people - 32%

Tourist - 3%

General people - 22%

 

We divided our target market into four different segment based on their geographic, demographic, psychographic and behavioural characteristics.

Health Conscious: Health conscious peoples are one of our largest market targets. In this segment, we get a lot of potential customer. About one third of our total population is young. Our concern is that young and our product is fit for them. About 5 million people of this total number are health conscious. They spend about £35-40 a month in average.

Sick people: People with health issues are one of our main considerations.

Tourists: Every year a huge number of tourists visit United Kingdom. We want to provide them with "Himalayan treat".

General Customers: Other then the above types of consumers, the general customers having great impact on target market.

Direct consumer: Superstores like Asda, Tesco, Sainsbury and Morrison.

Market Needs:

"Himalayan treat" wants to satisfy its customers need. Market need is very important to identify. Our first priority is to provide the best product to its customers. That’s why we offer two different sizes of packets with different prices for its different types of customers.

Double Fillet: The lowest price for the rural mid social class and individuals.

Half kilogram: Its target the sick people, tourist and small families.

 

2.3 Competitive Analysis

The Sea food industry is very much competitive. Many Sea food companies have got a significant part of the market. But the unique features of "Himalayan treat" will take it far beyond the reach of the competitor. The way we are thinking no one think for this product that why we will get hold on competitors. To evaluate our prospect of "Himalayan treat" in the current market, we have analysed the market situation in various ways. (Craig, S. And Babette, E. 2007)

Following are some demonstration of the analysis:

2.3.1 SWOT analysis:

The product existence in the future is depending on its strengths, weakness, opportunities and threats analysis:

Strengths:

1. Available material input

2. Low cost of production

3. Technological knowledge and marketing

4. Strong distribution channel

Manufacturing process easy

Reasonable price

Weaknesses:

It is easy to copy the idea by others

Taste differ from the natural Mahseer fish

We cannot preserved this product for longer period

Opportunities:

1. Monopoly market

2. Large market

3. High demand

Threats:

1. High competition in future by copying the idea

2. Entrance of new product

3. Uncertainty of launching a new product.

2.3.2 Competitor Analysis

The major Sea food companies of current market are:

Abbie park Grimsby Ltd

Ace Aquatec

Acl Atlantic Ltd

Anatrus

B & L Global Services Ltd

Iceberg Seafood Ltd

And many more

Distinct Competency:

These companies may try to enter our market with the launch of new product lines to compete with us. However, we have a competitive advantage. This is our product is still new. Other companies are entering the market sometimes. Until then, have a monopoly on the market. The other advantage is that we have a lower price. We will sell their products at reasonably low prices that competitors are others.

Strategies against competitors:

To compete with its main competitors, can take the following measures

To provide the best services to create high customer satisfaction

Affordable and acceptable

Promises and the availability of high quality

Communication activities are very effective defences

Constant innovation and product modification

Establishing and maintaining long-term customer relationship

The creation of "brand loyalty" with target consumers

3. Market Plan

Pricing Strategies

We have decided when we will develop our product we will set a reasonable price for it. We have looked many factors in setting the pricing policy. (Tim James, S. 2011)

We will describe a six-step procedure:

3.1.1. Setting the pricing objectives:

Our company has decided where you want to place your bid in the market. We chose to maximize our market share. We believe that the increase in turnover leads to lower unit costs and higher long-term benefit. We set the lowest price because it is assumed that the market is sensitive to price. Our overall goal is to capture maximum market share with lower price.

3.1.2. Determining Demand:

Each price will lead to different levels of demand and therefore have a different impact on the marketing objectives of the company.

3.1.3. Estimating costs:

We calculate that the cost and want to charge a price that covers the cost of production, distribution and sale of the product, including a reasonable return on the efforts and risks.

3.1.4. Types of cost and level of production:

We have to types of cost:

Fixed cost

Variable cost

The fixed cost price for our new product development project is £ 20, 00,000.

Machinery, monthly bills, and salaries of employees and others are includes in fixed cost.

In variable cost packaging and so on are includes. The cost of per unit production would be constant.

The estimated price for per unit production is £1.89 for Double Fillet packet and £4.89 for Half Kg packet.

3.1.5. Analyzing competitor’s costs, prices and offer:

We have checked our competitor’s price and we have found that Acl Atlantic Ltd charges £4.49 for Double fillet and Anatrus charges £4.99 for Double fillet. (www.reportlinker.com)

3.1.6. Selecting a pricing method:

We have chosen the method of costing target set price for our product. Pricing starts with an ideal selling price based on assessments of clients, and then the cost target will ensure that the price is met.

Promotional Strategies:

Gain a strong market position, it is necessary to emphasize the efficient defence. In order to achieve maximum market share, you must use the four tools of marketing promotion.

3.2.1 Advertising:

In the first phase will focus more on print ads and television. Advertising of these instruments is the most effective way to reach customers. We hope that this will have a huge impact on teenagers and other enthusiasts. Expect to reach 75% of our clients through effective advertising.

3.2.2 Personal Selling:

With the possibility of personal selling is not very effective for qualifying products as "Himalayan treat", we inspire and empower retailers to convince people to buy our product, when purchased only a portion of their seafood suppliers inform consumers the "treatment of the Himalayas' and nutritional aspects. Hopefully they will play an important role in increasing our sales.

3.2.3 Promotional Tools:

It is also intended to implement certain marketing tools. Initially, because sometimes we distribute our products to 50% discount for new customers only familiar with the product. This will be the trial of the market for our product. Later, we can apply the strategy of offering gifts, coupons, tickets on the occasion of the tourism market and competitive conditions.

Public Relations:

We have plans for future seminars commit social development, supporting social activities, organizing cultural events and entertainment games for mobile advertising.

Distribution Channel

In the initial phase, we will distribute the products of our unique distribution channel. We distribute our products through distributors. We will apply our own outlets in certain locations of market fundamentals. When we go to mass marketing, we offer our products through distributors in the country. Distributors receive our products in all provinces. "Himalayan Treats" will be available at all retail outlets in the country.

4. Manufacturing and Operations

4.1 Locations

We set up our manufacturing and other work areas in convenient locations. We prefer to develop business centres, warehouses and inventory in our various areas of the country where the stores will be easier for the collection of raw materials and transporting products to market.

4.2 Human Resource

The Board will be responsible for recruitment activities. Recruitment will be through written test followed by interviews.

4.3 Technological Aspects

It is necessary to use advanced technology for new and quality product. And that advanced machineries we will import from foreign countries. We will recruit skill people who can operate these machineries. We studied all the technical aspects and a list of tools and their cost. The machinery will be collected when required.

5. Financial Analysis and Documentation

5.1 Sales Forecasting

The following Table and graph show our expected sales for the coming five years:

Expected Sales(Per year)

Double fillet

(£000)

Half kg

(£000)

First Year

4000

4500

Second Year

4500

5000

Third Year

5500

5800

Fourth Year

6000

6500

Fifth Year

6300

6700

 

5.2 Profit and Loss Projection

For product line1 Double Fillet.

Item

Year 1

(£000)

Year 2

(£000)

Year 3

(£000)

Year 4

(£000)

Year 5

(£000)

Total Sales

44440

49995

61105

66660

69993

Total Cost

(45200)

(48350)

(54650)

(57800)

(59690)

Total Profit

(760)

1645

6455

8860

10303

Tax 40%

—

658

2582

3544

4121.2

Net Profit

(760)

987

3873

5316

6181.8

For product line2 Half Kilogram.

Item

Year 1

(£000)

Year 2

(£000)

Year 3

(£000)

Year 4

(£000)

Year 5

(£000)

Total Sales

75015

83350

96686

108355

111689

Total Cost

(76700)

(83000)

(93080)

(101900)

(104420)

Total Profit

(1685)

350

3606

6455

7269

Tax 40%

—

(140)

(1442.4)

(2582)

(2907.6)

Net Profit

(1685)

210

2163.6

3873

4361.4