An appraisal of developmental process and strategy in small family entrepreneurial venture. (a case study of the footsteps business) Essay
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Innovation and creativity come as a response and the desire to explore identified opportunities in the solving of pressing wants. In this light, the emergence of entrepreneurs and entrepreneurial development, is perceived as a germane avenue for the invention of new unexplored business venture in order to satisfy and meet the trend of our ever dynamic taste, approach in tackling our needs and perceived problems etc.
In the course of entrepreneurial development, the entrepreneur is faced with plethora of problems that tend to militate against the effective operation of the business concern. It then requires that wise decisions and planning be taken in every process of the enterprise operational area. Otherwise, the entrepreneurial outfit would be truncated by the poorly managed problem as a result of wrong decision making and poor planning.
This report appraises the entrepreneurial development process and strategy of a small family business. The focal point will be on the footsteps business, established by Roger and Judith Ironridge in 1983.
Internationalization of small firm business has greatly helped in the development of small entreprenurial business outfit. According to Matlay and Flecher (2000) Internationalization is“the ability and willingness to the simultanoeusly active in a number of countries in different parts of the world (through sourcing, distribution, capital transfers, production, allinaces and network) and a commitment to trans- national management of business in these markets”
The Travel and Tourism industry is a vast and lucrative business with many opportunities. In this light, Key Note Publications (2003), in its market review for 2003, has that “in year 2002 the number of overseas residents that visit the UK was estimated at 23.9 million. In 2002, UK residents spent an estimated 26.7 billon pounds on 167.4 million tourism trips, this exclude day trips within the UK.” From the International scene of the industry, it is seen that, “Figures from the international passenger survey indicate that the number of visits fell each year between 1998 and 2001… the number of visits fell by 7% over the review period…. The effect was compounded in 2001 by the foot – and mouth outbreak and the impact of the terrorist attacks on the US” (ibid).
CONCEPTUALISATION OF TERMS
There exist plethora definitions for the concept ‘entrepreneurship’. “The concept of entrepreneurship emanated along with industrialisation, was first conceived by Say and Cantillon, experienced further development by Adam Smith and his followers, with Joseph Schumpeter isolating innovation as its core” (Paula, 1996). Thus, entrepreneurship according to Hill and McGowan (1999), “can be seen as a process, which involves the efforts of an individual (or individuals) in identifying viable opportunities in a business environment and obtaining and managing the resources needed to exploit these opportunities”. In a like manner, Stevenson and Sahlman (1990), conceive entrepreneurship as “the relentless pursuit of business opportunities without minding the resources presently controlled by the person (entrepreneur) pursuing the opportunity”.
The above definitions therefore relay the fact that acting on identified business opportunity in an innovative way forms the core of entrepreneurship.
Entrepreneurship tends to promote and encourage economic growth, via entrepreneurial activities it results in increased productivity, it promotes innovative technologies, it also promote efficiency and effectiveness in business operational engagement.
It is also necessary that the meaning of entrepreneurship process be clarified. Entrepreneurship process is seen as the process of carrying out managerial functions of planning, organising, directing, communicating, controlling, and evaluating etc., to which a venture is created and developed.
The entrepreneurship process starts with an individual developing an idea for a new product, service or business venture. This idea can emerge from the conduct of a business research, or through chance. And the entrepreneur managerial behaviour plays a vital role in which this process is effectively utilised to develop the conceived idea(s) among the militating environmental factors that tend to negate or support the actualisation of the innovation idea(s). Another vital entrepreneurial process is the development of a business plan. Planning is a vital process in any business activity, for the business enterprise to thrive a good planning process is required. Gumpert (1997) defined business plan as, “a roadmap, a statement of strategy, or any other relevant conceptual label”. Burns (1990), also attest to the fact that “a business plan is an important ingredient in the success of any small business organisation”.
Developing a business plan would assist the business enterprise to determine the required resources, and also which industry to venture into. Therefore, effective planning for required resources is a vital step in the entrepreneurship process.
Managerial capacity in the effective dissemination of management functions of planning, organising, staffing, directing, co-ordination, reporting and budgeting (POSDCORB), this goes a long way in the development of a good business plan.
THEORIES OF ENTREPRENEURSHIP, AS IT APPLIES TO THE IRONRIDGE’S FOOTSTEPS BUSINESS.
Theory is a conjectual statement use to explain the relationship between or among variables. Thus, a concept is an abstraction from the real world in which to give explanation to a real life situation. There are several theories associated with entrepreneurship. Prominent among these theories are: The economic theory, socio-cultural theory, psychological theory, developmental theory, the Network theory, the political theory, the managerial theory, structural theory, the ecological theory, the multi-dimensional theory, the technological theory, the Behavioural theory and the innovative theory of entrepreneurship.
Schumpeter (1934) postulated the economic theory. The theory says that Protestant movement of the 16th century gave birth to the modern capitalism. He argued that entrepreneurs embark on innovation, which he termed ‘creative destruction.’ It is destructive in the sense that an entrepreneur will come out with the new idea, which will disorganise already established social structures, in terms of business organisations, structure of corporations. In theorising the economic theory of entrepreneurship to the footsteps business of Roger and Judith Ironridge, it is seen that the innovative emergence of the small family business is a novelty in the sense that it created and gave a new face to the pattern of conducting tourist site; whereby a historical approach is given and explored through an extensive research. This tends to conform to Schumpeters construct of ‘creative destruction’.
The psychological theory of entrepreneurship comes in line with Maslow Hierarchy of Need Theory. Here, the entrepreneur is seen as a self-actualising individual, who goes to the environment and achieves the best based on his own orientation. The entrepreneur tries to achieve higher level than that majority in the society. Looking at the pattern the Ironridge converted their expertise in history, into the establishment of the footsteps business, this conforms to the psychological theory. The couple tends to actualise their expertise by moving to the higher level, which normally the ordinary historians do not see as viable.
The Development theory takes a different approach at entrepreneurship. It sees the natural endowment and capacity of individual in terms of physical ability and intelligence could be imposed upon, if it is put through the process of training and development. The theorising the Development theory to the case study, it is seen that Roger and Judith Ironridge acquired education on history is a vital factor that has developed them in the knowledge and how to venture into the entrepreneurial establishment. This acquired knowledge in history gave them the skill and competence to successfully embark in the entrepreneurial venture.
An historical theory of entrepreneurship has it that past events on historical antecedents would have their distinctive effects on the processes of emergence of the behaviour and performance of entrepreneurs. Applying this historical theory of entrepreneur to the Roger and Judith Ironridge Footsteps Business, it is seen that the Roger and Judith have both acqired knowledge in the historical field.This knowledge goes a long way to form their interest in carrying out research work on historical sites. And the formation of the family business, emerges from the acquired academic knowledge of the couple.This goes to show that entreprenurship comes about, through ones past experience and antecedents.
The structural theory of entrepreneurship is based on the structural arrangement with the organisation. In this case staff arrangement from top level, middle level and to the lower level is conceived as a factor that can affect the effective operational pattern of the entrepreneurial outfit.
The poor structural arrangement of the footstep business, in the first generation family business stage, affects the operational level and pattern of the Ironridges business. It does not uphold the principle of division of labour. It is also seen that the structural arrangement of the business began to improve by the introduction of Isabella and Max who are experts in management and technology development, respectively. The non-conformity of the old pattern of operating the business and the contemporary style of business management introduced by the youngsters tends to affect the structural arrangement of the business and its operational level.
The Network Theory of Entrepreneurship can also be applied to the Ironridge’s footstep business. The network theory has it that entrepreneurs have chain of friends, religions which they rely upon for success of their business, ideas, provision of necessary funds and information.The Ironridge’s footstep business introduced their daughter and her friend (Max) who have ideas and expertise in management and technology. This scenario conforms to the network theory. The necessary area of expertise, which the business lacked, was covered up by the introduction of Izzy and Max. The way paving for development in the footstep business is a positive aspect of the network theory in place.
Managerial theory sees the entrepreneur as performing managerial functions of planning, organizing, coordinating, directing and controlling. The development of this managerial skill is an advantage for the entrepreneur to effectively manage his business.
Multi dimensional theory of entrepreneurship has it that there are several factors at a given point in time that determines whether people will engage in entrepreneurship or not. In the case of the Ironridge, it is their educational training in history and their love for what they do in the business, alongside with the experience they have gathered from battle fields and historical sites they have visited, all these are the multidimensional factors that led to the emergence of the footsteps entrepreneurial venture.
The technology theory has it that the performance of entrepreneur depends on the technology used in producing goods and services, and also in the solving of man’s problem. In the course of seeking ways of developing the footsteps business, Max, an expert in technological operations, e-commerce and Internet enabling, offer to introduce this skill in expanding the operational base of the business. This scene shows the technology theory is also applicable to the footsteps entrepreneurial venture.
Behavioral theory of entrepreneur has it that behavior and our life pattern determines the extent which experimentation of the enterprises can take place. Autocratic behavior does not permit experimentation of new ideas, while flexible behavior could allow freedom of experimentation of new ideas. The conservative nature of Rogers’s conflict with the experimental ideas of Max. This diversity might lead to killing of Max ideas or Max might venture out to establish his own entrepreneurial outfit.
Lastly, the innovative theory, which has it that an entrepreneur is an innovative individual who comes in with new product or idea where none, existed before, and nurture it and allows it to grow and develop it to a mature level.
The innovative establishment of the footsteps business by Roger sand Judith confirms with the innovative theory. The Ironridge explore and nurture the idea of creating the historical site. This led to the emergence of the entrepreneurial venture. The introduction of e-commerce and Internet operation by Max to the footsteps business is another aspect of the footsteps business operation that conforms to the innovative theory.
Other models such as the Rational approach, internationalization model, developmental view, resource based view, business/ family life circle etc, all these models proffer ways for which the family business can be studied.
CORFORMITY AND CONTRADICTRION OF FOOTSTEPS BUSINESS TO OTHER ENTREPRENEURIAL VENTURES.
Entrepreneurship applies to both large-scale enterprises and small-scale business. The characteristics of a large-scale entrepreneurial venture might be different in some ways to that of the small-scale entrepreneurial venture. The level of capital outlay available to both a large and small business outfit is not comparable, since the large business has many capital sourcing units than the small business do. This capital base of large enterprises makes it expand its operational; level specialists to man specific functions for the business, and the level of management to employee interaction tend to differ from that of the small-scale business concern.
In the course of differencing small – scale enterprises from large- scale enterprises, Osuagwu (2001:41), stated that, “ specifically, the influence of the owner – manager ( i.e. the entrepreneur) is perceived as the major factor distinguishing small- scale enterprises from large scale enterprises.”
Schollhammer and Kuriloff (1979) have documented a personalized management style as a major distinguishing characteristic of small business enterprise. This personalized management style of the small business entrepreneurship includes such issues as having personal knowledge of all employees in the small business enterprise, involvement in all aspects of management and lack of sharing of key management decisions.
The Footsteps Business conforms to those observed characteristics associated with small- scale entrepreneurial business venture. And it is also seen that there is a sharp contrast of characteristics of the Footsteps Business and those associated with large- scale entrepreneurial venture.
The conformity of the Footsteps Business to other entrepreneurial venture is enumerated below.
The decision-making procedure of the Footsteps Business is centralized, and controlled by Roger and Judith. While both couple operates in their separate area of supremacy, the business decision flows from them, no room for inviting decision or discretionary display from within or outside the business. Even when Izzy and Max came to partake in the business the decision making process was still centralized. This scenario of things conforms to the characteristics of a small- scale business outfit.
Another area where the Footsteps business conforms to other small entrepreneurial ventures is in its informal organizational structure. The structure that exists in the Footsteps Business has no clear defined responsibilities for the managers of the business; while Roger concentrate in the research of new historical fact, Judith who hitherto, is responsible for the administration of the business still turns to Roger to partake in some of these administrative functions. Also, she gives no room for delegation of functions to those employed by the business.
The imposed degrees of structure, formalization and routine dissemination of functions is another characteristic of the Footsteps Business that conforms with other small- scale business. In this aspect, there is conformity to the same pattern of carrying out the business activities, with little room for transformation and modification to current management techniques and technological advancement.
Sticking to the same old knowledge and pattern of operation is another area of conformity with operational pattern of other small entrepreneurial venture. The introduction of Izzy and Max to the Footsteps Business, this gave them a partial ad hoc control of the operational system of the business. This control level is just temporal, and could be terminated in the shortest time. This partial ad hoc control- system links the Footsteps Business with what ensures in other small entrepreneurial ventures. The rational approach (i.e. the two circles model) illustrates this, where it has it that family business conservative to old pattern of carrying out the business operations and other behavior such as inward – looking, family ties, this minimizes its ability to incur change in the expansion of the business.
For example, for the fear of incurring more cost of business operation , and the small level of funds associated with small business entreprises, it becomes difficult for these organisations to embark on extensive research work, to bring about the emergence of new skills and way of operation. Also, small business entreprises don’t have the adequate capital to buy modern equipments that will bring out a change in the mode of operations; as it is done in Large scale Enterprises.
In the operational level of Footsteps Business that contradicts other entrepreneurial ventures, this is mostly in contrasts with those characteristics of large- scale entrepreneurial ventures.
Most large-cale entrepreneurial ventures operate under the principle of delegation of functions, they also consult specialist who specializes in functional area and embraces a participative organizational setup. It is seen that the Footsteps business lacks these strategic management processes. There is no room for delegation of functions, no consultative forum with specialists, and there is no participative practice in the activities of the business.This situation may be attributed to the fact that there are only two of the Entreprenurs in the business. But, the introduction of Izzy and Max, it is expected that the level of participatory management strategy is improved upon.
As enumerated before, the Footsteps Business operates a centralized decision making system. This decision structural set-up differs from what exist in large-scale entrepreneurial venture, where they operate a de-centralized decision -making system.
There is, also, absence of teamwork in the Footsteps business. Roger operates separately in his research investigation; while the wife, Judith, suffers in silence over the burdensome administrative functions she operates. In a typical large- scale firm, the principle of ‘espirit de corps’ is operational.
A formal structure, system and a reward network characterize the large- scale entrepreneurial venture. This is absence in the Footsteps Business and most small- scale entrepreneurial outfits.
The Footsteps Business also differs from a large- scale entrepreneurial venture in the sense that it stick to its old entrepreneurial innovations, even as the years past by. Most large- scale entrepreneurial venture lost their entrepreneurial operational impetus as the business expands. Thus, the business gets diluted or lost as the business expands in its operational levels.
Similar situation is seen in real business operation, whereby a small business in its transition to a large scale enterprises. The mode of operation tends to differ, and also, the customer relationship will not be as personal as when the business is in its small size. The intrusion of new members to the business tends to change the business strategic and mode of operation. Since the interest of member of an organization differs, so will their priority be different from other members.
THE INTERFACE BETWEEN ENTREPRENEURSHIP AND STRATEGY IN SMALL FIRMS AS THEY DEVELOP.
As already mentioned, in the preceding paragraph, as a small- scale entrepreneurial venture develops and grow into large- scale firm, it tent to loose touch with its entrepreneurial innovations that brought it into existence.
As the developing firm begins to introduce new entrants into the business, each one of them have their own aspirations and areas of interests that may differ from those of the entrepreneur(s). as time goes by new business strategies are introduced, operational pattern would tend to deviate from what the innovator of the entrepreneurial venture have in mind. If not checked, the developing entrepreneurial venture tends to loose its entrepreneurship impetus.
Illustrating with the Footsteps Business, it is seen that the introduction of Izzy and Max brought along with it emergence of a new operational area; e-commerce and other Internet operational activities that differs from what Roger and Judith nursed in the creation of the business. It is the love for the nature of the job they do that motivates them. But Max and Izzy are focused on the avenue for further profit maximization and advancement of the business technological base.
The perceived motivating factor for the Ironridges is based on thier interest for the research work they engages on. And for Max and Izzy , they are keen at seeing that the family business operates in line with modern business management strategy and improvement on technological accumulation for the business.The differences in motivational intrest, if this persist there will be a point in time in the developmental stage of the business where there will be lost of the entrepreneurial impetus that the origination of the business was based on.
This tend to attest to the fact that the more development and expansion the Footsteps Business attains, as a result of inter- generational transition, introduction of new partners and children, and the expansion of the business to international level, among other factors, the entrepreneurial venture tend to loose its entrepreneurship impetus.
The Rational approach to Entrepreneurship ( i.e the two circles model) adequately capture this scenario where there is the difference in motivational factor between the Ironridges and Izzy and Max. The Rational approach has that in the cause of an expansion of a small family business, factors that has to do with emotional tendencies towards ones family members and friends, Subconscious behavior, Inward –looking inclinations and the minimized tendencies to accept change, these factors will have friction and conflict with those business factors that are task based, conscious behavior, out- looking and exploiting for change. Thus the rational approach has it that, these irrational family ties, inward looking behavior and resistance to change tend to clash with those business strategies that are aimed at efficiency and the growth of the business.
The emotional based attitude and inward looking inclination of the Ironridges is a major factor that conflicts with the expansionary measures that Max and Izzy want to introduce to the business. Thus, the Ironridges tend to be conservative to the old pattern of running the business, while Izzy and Max wants this business to follow the line of exploiting new grounds. Eventually, at the long run, if Max and izzy become part of the management of the business, the fact remains that they will tend to divert from the conservative pattern that was exhibited by the Ironridges.
For an effective and efficient management in large or small-scale business, it is imperative that a broad programme of action underlines the decision actions on set goals and objectives. Thus, it is necessary for the business to have a clearly spelt out business strategy.
Griffin and Ebert (1996), have it that, “every business organization, small or large, should have goals and objectives, and deciding what the business organization intends to achieve is the first step towards efficient and effective management.”
Using the SWOT analysis, it is pertinent that the areas of strength, weakness, opportunities and threats to the Footsteps Business are highlighted, before recommending a business strategy that would bring about effectiveness and efficiency to the entrepreneurial venture.
Having studied the Footsteps Business, it is discovered that the entrepreneurial strength lies in the motivational factor for Roger and Judith. Both of them are motivated through the likeness they share for their kind of business, and not the profit maximization. This has led them to carry out in-depth historical research, and tourists and travelers are at an advantage with the thorough research embarked by the duo. Also, the potentials exhibited by Izzy and Max, where both are trained with knowledge in modern business management techniques, and the ability of Max to bring the business in line with comtemporary technology, this will go a long way in improving the family business. And this is seen as a strenght the business tend to exhibit if the duo are enlisted to take part in the management of the business.
Another area of strength for the business is the preservation of the entrepreneurship impetus that the business is crated upon. For more than 20 years, the business retained its’ focus on primary task of genuine historical research and good service to satisfy their clients.
An area of weakness of the business lies in the fact that the managers, of the Footsteps Business, don’t give room for modern management techniques. The old way of doing things is sacrosanct. This tends to retard the level of growth of the business. Also, there is poor structuring of the management of the business. There is a need to seek the help of experts in management and technological improvement (such as Izzy and Max)
Vast opportunities abound for the Footsteps Business; the level of competition is not in the increase. The business can explore these vast opportunities through result oriented planning and embarking on effective management practices.
The threat to the business lies in the introduction of other experts and subordinates to manage the business. As time goes by, the business may loose its’ entrepreneurship impetus, because this is the motivational factor for the Ironridge.
Based on this SWOT analysis, it is recommended that the Footsteps Business should hire experts in management and technology which have contemporary knowledge of in their profession, and also, the vital point here, is that, these recruited expert should share the same interest as Roger and Judith, so that the team could work harmoniously to the development of the business.
It is also recommended that decision making should not be centralized, but participatory and de-centralized; where discretionary view are welcome and upheld. This will bring more innovative ideas that would contribute in the better management of the business.
Kontes and Mankins (1992), Przybylowicz and Faulkner (1993) and Covin and Miles (1999), buttress the fact that the issue of core competence has been seen as a basis of advantage for small business enterprises. Thus, they opined that, strong and consistent emphases on competitors, in addition to an economic framework for investment decisions, are of managerial importance to the success of small and large business enterprises.
In the light of the forging, it is recommended that the Footsteps Business adopt a managerial strategy that would make it be at an advantage over its competitors; this can be attained through effective division of labor, de-centralized decision making and the practice of modern management techniques.
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