Entrepreneurial understanding is very essential for sustainable development of business venture. The knowledge plays a great role in ensuring that the operations within an organization are carried out systematically to achieve overall organizational objectives. As manages of organizations, it is important to keep learning the necessary entrepreneurial skills necessary for running the affairs of the business. The skills are even more important in case of new business venture that needs to be nurtured carefully to achieve development and business growth. In order to achieve success in a business venture, it is always important to have a proper understanding of the business venture and the environment within which the business operates. In this chapter, we will discuss the different aspects that are likely to affect a business venture. Our main area of concern will be the retail of food and drugs through chain of supermarkets (Lussier & Corman, 2014).
Changing global environment
The modern business world has been faced with several dynamic changes and the retail sector has not been spared either. Any business entity must be conversant with these changes and lay strategic plans that will help deal with them. It is important to understand these changes as they will be essential for future plans. The most affected sector remains the food sector although even non-food products have also been affected significantly (Ciampi, 2009).
One of the most notable changing trends is the ever declining consumer spending levels. This has even been more on discretionary goods. It has been note that total consumer expenditure has weakened since the great economic recession and has remained so over the years. The rate is expected to deteriorate due to increasing interest rates, rising production costs, uncertainty, rising petrol and electricity prices and high levels of unemployment. With such factors continuing to press hard the potential customers, then it is likely that their purchasing power will decline continuously over the years.
Business costs have also continued to rise, they have registered significant increase not only in the variable costs but also in the fixed cost. As a result f increase in business cost, the commodity prices have also increased thus making consumers to dig deeper in their pockets for such commodities. The demand by government such as tax compliance has also resulted to significant rise in commodity prices. For instance, a 17% VAT on a commodity results to substantial increase in the price of the commodity.
The other element in the global retail industry is the technological advances experienced in the sector as well as the global business. The consumers are adopting different technological devices at a very increasing rate. This may at times result to some of these commodities being obsolete within a short period. On the other hand, the technology advances has also been to the betterment of the industry. For instance, the retail industry has adopted online sales and marketing which has been of great help to the industry. The technological changes have had different impacts on the consumer behavior (Antoni, 2007).
The industry has of late got so many players making the competition in the industry very stiff. The retailers both locally and internationally have been actively involved in such business. Most of these supermarkets have also been actively involved in sales of non food products such as clothing, electronics and drugs thus making the industry very competitive. The adoption of the modern technology has increased competition to another level since customers can be able to access products at the comfort of their homes (Pour, 2006).
The retail business industry is also concerned with the environment and tends to be environmentally friendly and be appealing to the green consumer. In order to remain sustainable, each of the business ventures must ensure that it is socially friendly to the potential customers. The commercial performance and the sustainability of these retail outlet will be highly influenced by its ability to be socially acceptable in its environ (Lussier & Corman, 2014).
Opportunities and threats
All the above global changes can bring about threats and opportunities to the new business venture. In order to understand the threats and opportunities that will face our business enterprise, it will be very important to conduct a SWOT analysis. This is a very essential business analytical tool that helps determine strengths, weaknesses, opportunities and threats within a business set up. Strengths and opportunities are taken to the advantage of the organization while threats and weaknesses should be mitigated to reduce their adverse effects.
In essence, the venturing in the retail business is faced with several threats and opportunities. However, it is the responsibility of the management to ensure that they take advantage of opportunities and strive to ensure that the threats to the business have minimum effect to the overall performance of the organization. For instance, the management of this retail shop must take advantage of the opportunity for development and growth of the company. The organization must strive to ensure that the number of merchandise stoked in their retail outlets varies from food products, clothing, electronics and household items. This will ensure that the consumers have a variety of products to choose from. The other opportunity for growth will be to expand its presence in other parts of the world apart from UK. This will also be effective in dealing with a threat where retail sector may be in problem in UK as the enterprise can offer its products in other parts of the country (Antoni, 2007).
On the other hand, the organization’s management must deal accordingly with the threats likely to limit the success of the business venture. For instance, the issue of being environmentally friendly has proved to be a major threat to the profitability of the firm. However it is advisable for the management of Beaverly to employ heavy promotional techniques which will help create a brand name. With a good image, consumption on the green movement may be reduced significantly since the consumers will always have a good image of the retail shop (Parker, 2006). By creating a good brand name, the company will also have dealt with the stiff competition in the industry. The level of competition is very stiff and can only be won by investing heavily in advertising and promotional activities.
The government plays a very important role in the success or failure of any business. This is because it is the responsibility of the government to provide guidelines within which all businesses in the state will operate. For instance, the UK government must provide Beaverly plc with business permit to commence its retailing business. There are also other rules and regulations that the management of this firm must be conversant with. Failure to understand these legal requirements can be very detrimental to the success of the organization and in extreme cases it can lead to overall closure of the business (Lussier & Corman, 2014).
For instance, it is evident that there are very stringent laws on foods and drinks in United Kingdom. As a result, the Beaverly plc will have no option but to follow more and more of packaging and labeling policies to deal with these rules. Though it is an expensive exercise, the management will have to bear the extra costs since failure to hinder to those rules can be detrimental. The management will make arrangement on how to recover the extra expenses as the price their commodities. However, it will also be important to understand the prices offered for the same commodity by competing firms to ensure they remain competitive.
Another very notable impact with the government of UK is the high tax rates associated with this country. For instance, the VAT charged on commodities sold is at 17%. This is very undoing to the business since they will have to charge high prices that consumers may find it difficult to handle. This can consequently lead to low sales as well as revenues for the retailing shop. The taxes charged on the workers working in United Kingdom are also exorbitant. The tax requirements of the employees at times is said to be more than half of the employees take home salary. As a result, workers in this country will tend to charge high wages to cater for the huge amount taken by government in terms of taxes. In order to deal with this menace, it is recommended that the company will recruit a reasonable number of employees to have a reasonable wage bill (Pour, 2006).
The government also plays a significant role in ensuring that a country enjoys political stability. Where there is political stability, the government is able to formulate and implement policies that can lead to business development. On the other hand, a country where political stability is very rare, and then there are polcies that hinder business growth and also keeps off foreign investments. It is important to understand that United Kingdom has over the years enjoyed political stability and thus Beaverly will have smooth operations within this country.
Government spending is also known to have a great impact in the operations of a business within a country. This is because government spends money obtained from taxation which means that increased spending requires an increase in level of taxation as well as increase government borrowing. As a result, the money left in circulation is very little thus consumers lack purchasing power. In addition, increase in taxes will discourage investors and at the same time eats into the savings intended for investment purposes (Kuratko, 2014). The government should adopt a moderate spending whereby investors and consumers will have some money left for investment and consumption. It is important to note that the government spending in United Kingdom is moderate and hence had positive influence in starting of the business venture.
Interest rates form another important consideration as far as government impacts on business is concerned. The level of interest rates in a country mainly depends on the government policies. An increase in the level of interest rates results to increase in the cost of borrowing, thus making it difficult for potential investors to access investment funds. It is also important to understand that the rise in interest rates also leads to decrease in consumer spending (Bailey, 2011). On the other hand, lower interest rates play a significant role in attracting investors since there is increase in production. Interest rates if are not properly controlled can lead to inflation which can be detrimental to the country’s economy. Since businesses do not thrive well in such economies. However it is important to understand that the interest rates in United Kingdom have been stable for quite a long time. It is for this reason that Beaverly and other start-ups will be able to kick start their businesses.
The government also expects annual reports on the financial performances of the businesses operating in that state. This is usually done to monitor the transparency in the company dealings as well as detect frauds. Several governments have stipulated several rules and regulations that regulate incorporated bodies financial positions. Failure to adhere to these rules can lead to legal battles which could hinder growth and development of the firm. Most of these financial reporting are doe after a fiscal year and it would be advisable to the management to ensure such reports are made (Lussier & Corman, 2014).
In addition, it important to note that Beaverly plc has future ambitions of becoming a global chain of supermarkets. If this dream is to be realized then the management of this corporate body must be conversant with laws of those countries that it intends to extend its operations. For instance, some governments have very strict labor laws that the company must understand and comply with. These include factors such as age, working hours and remuneration. The management of the organization must ensure that it adopts strategy that will comply with such rules and still remain optimistic of the company’s objectives.
Some countries have very harsh trade barriers and tariffs that try to keep off foreign investment. In such instances, the management is recommended to check on the following strategy; Foreign Direct Investment, mergers and acquisitions. Through such strategies, the company will save immensely and still achieve its strategy of getting global.
For a long time now, most business start-ups are not concerned with survival but instead they are concerned with growth and development of the business enterprise. In order to realize such growth and development especially in such a challenging environment one requires to have a proper understanding of entrepreneurship and entrepreneurial traits associated with growth and development. Entrepreneurship is defined as the ability to plan, start up, take advantage of business opportunity, provide innovation and assuming the risks of a business venture. Though this is what s expected of entrepreneurs, it is at times difficult to find all of these traits to all the entrepreneurs.
Innovativeness forms one of the most important entrepreneurial traits that can help a business through start-up up to growth and development level. Innovativeness is inseparable with creativity and refers to a person who has the ideas, vision and energy to create a business start up that is expected to reach unexpected growth levels. After having an idea of what is expected, it is important to plan and pull resources that will help the innovation to be realized. Lack of essential resources may just render the innovation to just being a normal idea (Bailey, 2014).
Another important entrepreneurial trait is the ability to work in coordination with other people in the course. After effectively planning the route map to the organizations success, it is important to also have all resources whether human or capital planned in a way that will help achieve the goals of the objectives. A good entrepreneur must be able to put together a team of talented Beaverly plc individuals who will play a great role in achieving organizational objectives.
High initiative and personal responsibility is another vital entrepreneurial trait necessary for growth and development of Beaverly plc. An effective entrepreneur must always take responsibility for any occurrence that may occur in the course of implementing the business strategy (Kuratko, 2014). It would be very bad to see an entrepreneur blaming juniors for mistakes occurring in the course of duty. In essence, the entrepreneur is expected to take responsibility and act swiftly to overturn the situation or bring it to normal (Lussier & Corman, 2014). It is also at this juncture that the entrepreneur must set self imposed standards that will be a great source of motivation to the entrepreneur.
Another important trait associated with entrepreneurs is that they should be risk takers. Any business venture is a risk and if one is not a risk taker will not be in the business at the first place (Longenecker, 2012). Entrepreneur of the Beaverly plc should take risk in making investment where one invest heavy capital with no certainty of returns. Failure to take risk will lead to non-start-up and thus there will be no expected returns for investors.
Entrepreneurs can also be not successful if they fail to adopt a good communication strategy both vertically and horizontally within the organization. Entrepreneurs should be consultative and always should look for feedback on the development of the venture. Constant communication within an organization serves as motivation for all stakeholders since they feel part of the project. The process also entails continuous pragmatic problem solving since disputes will be sorted out through amicable communication.
Starting and developing a business venture is not an easy task especially in such a dynamic economy. Though Beaverly plc hopes to be a successful venture now and in future, it is important to understand the different challenges and opportunities that face the business. It is also important to understand the different entrepreneurial skills that are necessary for venture growth and development (Antoni, 2007). For a business venture to be successful there must be adequate resources whether in terms of human, financial, capital or technological resources. In conclusion, entrepreneurship is a process that involves planning, implementation, and management as well as the cooperation of others in order to exploit an opportunity for profit. This should be the guiding principle in the course of successful business venture.
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