Entrepreneurship In Contexts Of Business Management Commerce Essay

Entrepreneurship In Contexts Of Business Management vocation EssayThe stemma world foot be seen as a complex system of individuals and logical argument brasss that, in a justify market delivery such as South Africa, involves the activity of transforming hardly options into products and go in holy order to meet the need of guild (Du Toit, Erasmus S actdom, 20074). Business musical arrangements accordingly solve the funda mental stinting problem of how to ensure the highest doable propitiation of needs with scarce resources (Cronje, Du Toit Motlatla, 200123). In order to construe how the vexation organisation satisfies the needs of nightspot in a relinquish market thriftiness, it is great to understand the driving force behind the communication channel organisation, to wit the entrepreneur (Du Toit et al., 200737). The entrepreneur is at the heart of a free market economy and establishes furrow organisations and in doing so takes jobs and wealth (Cronje e t al., 20013).Entrepreneurs and advancedly cable insane asylum is original to the bugation of the South Afri flowerpot economy and to the future socio-political st grapplency of the country (Von Broembsen, Wood Herrington, 20055). Due to low sparingal growth, high un usage and an off train of p everyplacety in South Africa, entrepreneurship becomes a critical base (Rwigema Venter, 200427). As menti angiotensin-converting enzymed in Chapter 1, one of the around historic groups of entrepreneurs at heart the economy with considerable potential to contribute to stinting growth, frugal ontogeny and employment gene proportionalityn atomic number 18 business women (Blumberg Kenan, 2008 Ahl, 2006 Negash, 2006 Blumberg, 2005 Republic of South Africa, 2005 Baker, Aldrich Liou, 1997). Therefore, this consume localisees on the strategical entrepreneurial behaviour of business women in South Africa.An break down understanding of entrepreneurial behaviour and decision -making would change business guidance students to better understand how business organisations function in todays competitive milieu. In this chapter the fancy of business focussing is addressed. The chapter starts by introducing the subject of political economy, followed by an overview of business direction as a discipline. This section leads to a discussion of the descent surrounded by frugals and business counsel. Then follows a section which elaborates on entrepreneurship and strategic commission as well as a section how these twain fields overlap. Special attention is given to entrepreneurship and strategic perplexity in an attempt to clarify the position of this study in a business perplexity context. The position of the study inwardly the field of sparings and business prudence is illustrated in depict 2.1.Figure 2.1 The position of the study inwardly the field of economicals and business care2.2 ECONOMICSEconomics has been be in various shipway in it s more than 200 twelvemonth history (Arnold, 20043). It is because useful to review a number of descriptions of what political economy thinks. Alfred Marshall (1824-1924) resistantly defined economics as the study of gentleman in the ordinary business of life it is the study of wealth and of man. Lionel Robbins (1898-1984) description focussed on choice outputs that erect be get hold ofd with scarce resources. He defined economics as the science which studies human behaviour as a kind in the midst of ends and scarce means which put on alternative uses. Similarly, Milton Friedman (1912-2006) said that economics is the science of how a particular(a) society solves its economic problems. He then argues that an economic problem exists whenever scarce means argon utilise to satisfy alternative ends (Arnold, 20043). It seems from the above definitions that economics is the study of how society manages its scarce resources (Mankiw, 20044). much comprehensively, economics i s the study of how individuals and societies deal with the fact that wants atomic number 18 greater than the especial(a) resources available to satisfy those wants (Arnold, 20043).The condition, under which wants argon greater than the limited resources available to satisfy those wants, is called scarcity (Arnold, 20043). This endeavour to strive the highest accomplishable satisf implement of needs with scarce resources is known as the fundamental economic precept (Smit, Cronje, Brevis Vrba, 200720) and every economic system is subject to it (Cronje et al., 200123). That being so, it follows that each percentage of an economic system, including a business organisation, is also subject to the economic principle (Nieman Bennett, 20066 Cronje et al., 200123).In order to create wealth and satisfy wants, as implied in the definitions, resources atomic number 18 utilised (Nickels, McHugh McHugh, 20089). Resources are divided into quaternion broad categories, called factors of p roduction. These factors of production are land, labour, capital, and entrepreneurship (Arnold, 20045). Land includes all natural resources, such as minerals, forests, water and unimproved land. Labour, on the new(prenominal) hand, consists of the physical and mental talents mountain contribute to the production attend to. Capital consists of produced goods that enkindle be apply as inputs for further production. Entrepreneurship, the focus of this study, refers to the particular talent that some individuals hold up for organising the resources of land, labour, and capital to produce goods, set about refreshed business opportunities, and develop new ways of doing things (Arnold, 20045). It furthermore refers to the initiative of putting unneurotic a spue of production factors in various combinations in diverse businesses to satisfy the legion(predicate) needs of consumers (Nieman Bennett 20066).The field of economics is traditionally divided into two broad subfields, nam ely, microeconomics and macroeconomics (Mankiw, 20044). On the one hand, microeconomics deals with human behaviour and choices as they relate to relatively small units and studies inter saves through individual markets, given scarcity and government rule (Arnold, 200427). In other words, microeconomics is the study of how households and homes make decisions and how they interact in specialised markets. On the other hand, macroeconomics deals with human behaviour and choices as they relate to highly aggregate markets or to the wide economy (Arnold, 20044). Macroeconomics is thus the study of economy-wide phenomena (Mankiw, 200427). The wassail study is related to microeconomics as it deals with individuals i.e. business women and how they make decisions to allocate scarce resources.Neoclassical economists are provokeed in decision-making, especially the follows and incentives associated with economic choices (Hicks, 1937). The decision-making process plays an important role i n any business organisation and is of importance for problem-solving, the information of business plans, and goal-directed behaviour (Gray, 2001). In macroeconomics, a neoclassical synthesis was developed in the early 1950s, based on an desegregation of Keyness imaginations and the ideas of earlier economists (Blanchard, 2006576). These theories had a fundamental impact on the in advance(p) understanding of firms and their relation to the environment.In economics theories are useful for explaining and predicting economic behaviour. Theories are developed to explain observed phenomena in scathe of a set of basic rules and assumptions (Pindyck Rubinfeld, 20055). The speculation of the firm consists of a number of economic theories which describe the disposition of the firm, company, or corporation, including its humanity, its behaviour, and its relationship with the market (Coase, 1937), which impact business focus scholars understanding of the field. The theory of the firm is based on a simple assumption namely that firms try to maximise their pro agrees (Pindyck Rubinfeld, 20055). The theory of the firm furthermore provides an explanation of how a firm makes cost-minimising production decisions and how its cost varies with output (Pindyck Rubinfeld, 2005188). In simplified terms, the theory of the firm attempts to answer questions regarding the existence of firms, the boundaries of firms, the organisation of firms and questions concerning heterogeneity of firm actions and performances (Coase, 1937).To summarise, the field of economics focuses on how society manages its scarce resources, also called factors of production, to satisfy the needs of society. In order to understand how entrepreneurship, as one of the factors of production, influences wealth population in the economy, one has to instruct the role of business management which is concerned with the management aspects of the factors of production.2.3 strain charge AS A DISCIPLINEThe orig ins of traditional management nominate be traced back to the need for efficiency and effectiveness (Weymes, 2004340). The endeavour to achieve the highest achievable satisfaction of needs with scarce resources is known as the fundamental economic principle (Smit et al., 200720). Within economic and management sciences, traditional business management is subject to this principle, and the managements task is thus is to decide how an organisation nookie achieve the highest possible output with the least possible input (Smit et al., 200720 Scheepers, 20097). More specifically, it entails an examination of the factors, methods and principles that enable a business to function as profitably as possible in order to maximise its profits (Nieman, 200539). In short, the individual business green light should focus on realising the economic principle (Scheepers, 20097).The study of business management depends on comprehensive and on-going investigate and the examination of management p roblems, the testing of approaches and principles as well as experimentation with methods and techniques. Business management is thus an applied science that studies how business organisations can best be directed towards realising their objectives given their limited resources (Du Toit et al., 200727).Klekamp (196854) defines business management as achieving organisational goals through people. It is useful to consider this time-worn definition through the linear stead of three fundamental schools of management. These schools are the traditional school of management the behavioural school of management and the harbord school of management.It appears that the traditional school sees the acquisition of organisational goals as a process. It further suggests that the process is universal i.e. the distinguishing characteristic of a manager is the mastery of her discipline and the application of her art rather that the environment in which it is practiced. The behavioural school, on the other hand, focuses on the achievement of goals, as the process does, but dwells to a large extent upon why people act as they do when under the influence of the management process and in the company of people grouped together for the accomplishment of organisational goals. Alternatively, the quantitative school proposes that the achievement of goals depends to a large extent on the select of the decisions made in the practice of the management science (Klekamp, 196854).Although, business management has been defined by a number of authors, fundamental to most definitions is the idea that management is a social process of planning, coordination, watch, and indigence (Pettinger, 2002 Hodgetts, 1981114). One can infer that business management therefore involves satisfying needs with a limited amount of resources through planning, coordination, control, and motivation of these resources (Ward, 200819).The many definitions offered in the writings on management demonstrate the w ide differences of opinion among writers and experts about the tasks and activities of management. Figure 2.2 illustrates the four fundamental tasks that are singled out as the most important activities of the management process. These are planning, organising, leading and control (Du Toit et al., 2007129).Figure 2.2 The four fundamental management tasks represented as a processSOURCE adequate from Du Toit et al., 2007130The following brief description of the fundamental management tasks clarifies the opinion of management and the management process. The first fundamental task of management, namely planning, determines the relegation and goals of the organisation, including the way goals are to be reached in the long-term, and the resources needed for this task (Du Toit et al., 2007130). strategic management is an integral part of planning and is the process of developing a vision, mission and long-term objectives for the organisation as a whole. According to Nieman and Bennett ( 200214), organisations make headway if their strategies are appropriate for the circumstances they face, and feasible in respect of their resources, skills and capabilities. strategical management is discussed in more depth in Section 2.6.The fleck fundamental task in the management process is organising. This task refers to the development of a frame take or organisational structure to indicate how people, equipment and materials should be industrious to reach the predetermined goals (Du Toit et al., 2007130). Leading, the third fundamental task, entails directing the human resources of the business and motivating them (Du Toit et al., 2007130) in order to get them to perform in such a way that the organisational objectives can be achieved (Nieman Bennett, 200699). The final fundamental task, namely control, implies that managers should constantly establish whether the business is on a proper bod towards the accomplishment of its goals (Du Toit et al., 2007131) as well as stru cturing the activities of the organisation to facilitate the increase of its objectives (Nieman Bennett, 200693).The fundamental task of business management is, however, not only to plan, organise, lead, and to control but to study those factors, principles and methods that will lead a business organisation, as a component of the prevailing economic system, to reach its objectives against the background of limited resources (Du Toit et al., 200728) within the microeconomic field of study. In the following section the relationship mingled with economics and business management is discussed. Particular attention is paying(a) to the discussion of a business organisation as a component of the economic system, specifically how, as a need-satisfying institution in the free market economy, it provides for the needs of the community (Cronje et al., 200132).2.4 human relationship BETWEEN ECONOMICS AND BUSINESS MANAGEMENTOn the one hand, economics, as a social science, studies how milit ary man and society exercise choices concerning diametrical ways of utilising their scarce resources in order to satisfy unlimited needs. On the other hand, business management as an applied science is concerned with the study of those institutions in a particular economic system which satisfy the needs of a community. Economics examines the entire economic system, while business management limits its studies to one component of the economic system, namely the individual organisation (Cronje et al., 200123).Business management is thus near linked with microeconomics and the theory of the firm as the purpose of business management is to hold an organisation to the economic principle (Cronje et al., 200123). Business management, as a field of study, is concerned with the management aspects of the inputs, the conversion process, and the outputs (Nieman Bennett, 20066). More specifically, it entails an examination of the factors, methods and principles that enable a business to func tion as productively as possible in order to maximise profits (Nieman Bennett, 20024).In order to understand how the business organisation satisfies the needs of society in a free market economy, such as South Africa, one has to understand one of the driving forces behind the business organisation, namely the entrepreneur (Du Toit et al., 200737).2.5 ENTREPRENEURSHIPEconomic development can be directly attributed to the level of entrepreneurial activity in a country (Bird, 1989 Schumpeter, 1934) as entrepreneurial businesses are responsible for growth and job creation in the economy (Nieman, Hough Nieuwenhuizen, 20033). Entrepreneurship is the process that causes change in the economic system through mental institutions of individuals who respond to opportunities in the market. Entrepreneurs are contest living assumptions as well as conventional rules of business and are creating foster in novel and creative ways for themselves and society (Morris, Kuratko Covin, 20083). It is therefore important to study entrepreneurship in an increasingly globalised world where survival lots depends on people who are driven by opportunity and who seek to achieve their goals in a sustainable way (Rwigema Venter, 20049).Although the term entrepreneurship has been in use for over 200 years, considerable disagreement remains over its meaning. Although the disagreement seems superior if definitions of entrepreneurship amidst disciplines are compared, a consensus is found if definitions produced by specialists in the same field, are compared (Nieman et al., 20039). Economists, for example, tend to agree that entrepreneurs are associated with mental institution and are seen as the driving forces of development (Filion, 1998). The behaviourists, on the other hand, try to understand the entrepreneur as a person and ascribe to the characteristics of mainly the on the table interpretative models. The behavioural approach places emphasis on explaining how decisions are ta ken within the firm. However, any theory of entrepreneurship must be flexible and multidimensional to reflect its multidisciplinary roots (Nieman et al., 20039 Filion, 1998).While multiple definitions of entrepreneurship could be found in the literature (Sharma Chrisman, 1999 Venkataraman, 1997 Schumpeter, 1983 Kirzner, 1973), no single definition has been authorized by the whole entrepreneurship field (Scheepers, 200725). For the purposes of the present study entrepreneurship can be defined as the process of creating value by bring together a unique combination of resources to attempt an opportunity (Barringer Ireland, 20065 Stevenson, Roberts Grousback, 1989). Since this definition implies that (1) entrepreneurship may vary in terms of the extent and number of generation it occurs (2) entrepreneurship occurs in various contexts for example start-ups and incorporate firms (3) it is a process that can be managed and (4) it creates value and it is opportunity-driven (Scheepe rs, 2009).Firstly, regarding the implication that entrepreneurship may vary in terms of the extent and number of times it occurs, it is useful to examine the thought of entrepreneurial intensity (EI). The term of EI was pioneered by Morris and Sexton (1996), who view EI as a function of the peak and frequency of entrepreneurship (Morris, 199842). Frequency of entrepreneurship refers to the number of times an enterprise acts entrepreneurially. In other words, the number of entrepreneurial events that takes place within a company over a given period of time (Morris et al., 200869 Morris, 199842).The degree of entrepreneurship could be assessed against the background of three dimensions innovativeness, risk-taking, and proactiveness (Erasmus Scheepers, 2008 Morris, 199837). Innovativeness, the first dimension of the degree of entrepreneurship, refers to the ability to generate ideas that will culminate in the production of new products, assistants and technologies. Risk-taking, the second dimension, involves the determination and courage to make resources available for projects that have uncertain outcomes. Attempts are made to manage these risks by researching a market, recruiting and employing versatile staff among other strategies. Proactiveness, the third dimension, indicates top managements stance towards opportunities, encouragement of initiative, competitive aggressiveness and confidence in pursuing enhanced competitiveness (Morris, 199818, 41-43).The concept of EI is illustrated in Figure 2.3. The two-dimensional matrix, referred to as the entrepreneurial grid, shows the frequency of entrepreneurial events on the vertical axis, and the degree to which these events are innovative, risk-taking and proactive on the crosswise axis (Morris et al., 200869). EI must become a key activity ratio that is monitored on an ongoing basis within organisations. Assessment at the level of the organisation can be apply for various purposes to benchmark and drag le vels of entrepreneurship establish norms and draw industry comparisons establish entrepreneurship goals develop strategies and assess relationships between EI and organisation performance variables over time (Morris et al., 200878).Figure 2.3 The entrepreneurial gridSOURCE Morris et al., 200870Secondly, as implied in the definition of Stevenson et al. (1989) entrepreneurship in macrocosm can occur in various organisational contexts (Morris et al., 200811). These organisational contexts may range from establishing a new enterprise, growing an existing small business, or innovation within large organisations (Scheepers, 200927). In other words, entrepreneurship can also be used to describe entrepreneurial actions within a firm. In this instance, an entrepreneurial firm creates wealth by concentrating on being innovative, proactive, and risk-taking (Ireland, Hitt, Camp Sexton, 200151). Corporate entrepreneurship is a term used to describe entrepreneurial behaviour inside existing org anisations (Morris et al., 200811). Within these different contexts the definition above still applies, since the process and inevitable inputs are similar, even if the outputs differ (Scheepers, 2009), therefore the female entrepreneurial behaviour examined in this study is still regarded as entrepreneurship, even though it may occur in two contexts, namely within a corporate context or in an independent venture.Thirdly, as stipulated in the definition, entrepreneurship can be viewed as a process. Therefore even though entrepreneurship and innovation are inherently unpredictable, chaotic and create ambiguity entrepreneurship is a process, and as such it can be managed. Entrepreneurial events are characterised by different stages, such as opportunity identification, business concept definition, assessment of the resource requirements, acquisition of the needed resources, and then the management and harvesting of the business (Morris Kuratko, 2002).Finally, the ability to act entre preneurially is linked to the perception of opportunity. The pursuit of opportunities also emphasises that those opportunities, which create the greatest value, could be exploited.It is important to note that entrepreneurship differs from management. There are important differences between the entrepreneurial and managerial functions, as well as the expertise and get bynce with regard to each (Nieman et al., 200313). Management is a social process of planning, coordination, control, and motivation (Ward, 200819). Management thus involves getting things done through other people and is, in a sense, a transformation process, where human, technical, and conceptual skills are used to transform inputs into outputs (Morris et al., 200812). Entrepreneurship, on the other hand, is the process of creating value by bring together a unique combination of resources to exploit an opportunity (Barringer Ireland, 20065 Stevenson, Roberts Grousback, 1989). Entrepreneurs envision the future, re cognise emerging patterns, identify untapped opportunities, and create innovations to exploit those opportunities (Morris et al., 200812).Figure 2.4 contrasts the primary roles of the manager with those of the entrepreneur. The figure shows that managers are charged with the economic and effective utilisation of the resources under their control. They tend to be focussed on optimising current operations. Entrepreneurs, alternatively, demonstrate creative capabilities in obtaining resources, overcoming obstacles, and persisting in implementing new ideas that represent change (Morris et al., 200812).Figure 2.4 Comparing and combining key roles of managers and entrepreneursTHE entrepreneurial MANAGERSOURCE Adapted from Morris et al., 200813One of the general approaches to management methods with the purpose of creating a sustainable competitive advantage is that of strategic management (Cronje et al., 200124). According to Nieman and Bennett (200214), strategy is fundamentally about a fit between the organisations resources and the markets targeted by it, as well as the ability to sustain fit over time and in changing circumstances and to create and notice a competitive advantage within a given market. Therefore, the nature and characteristics of strategic management is discussed in the following section.2.6 STRATEGIC MANAGEMENT some(prenominal) schools of thought with different opinions about the nature and scope of strategy can be distinguished from the literature (French, 200913). There is also a wish of a universally accepted definition of strategic management. However, central to most definitions is the notion that strategic management is the process through which managers formulate, implement, and monitor action plans to optimise the achievement of key goals (Rwigema Venter, 2004195).Barney and Arikan (2001140) define strategic management as a firms theory of how it can gain superior performance in the markets within which it operates. Venkataraman and Sarasvathy (2001651) define the subject of strategic management as having to do with the methods used to create value and the ensuing struggle to capture a significant share of that value. Hough, Thompson, Strickland and Gamble (20084) propose that strategy consists of the competitive moves and business approaches that managers employ in order to grow the firm, attract and please customers, compete successfully, conduct operations, and achieve the targeted levels of organisational performance. For the purpose of the present study strategic management is defined as a process that deals with the long-term entrepreneurial work of the organisation, with organisational renewal and growth, and more particularly, with developing and utilising strategy, which is a guide to the organisations operations (Lyles, 1990363). strategical management has gained prominence in recent years as organisations compete in volatile environments (Rwigema Venter, 2004197). The dynamic environment in which or ganisations operate poses ongoing management and leadership challenges, marked by complexity, uncertainty, and ambiguity (Rwigema Venter, 200493). Traditional business models are often no longer applicable and some managers are abandoning conventional approaches to strategy as they search for new ways to achieve a competitive advantage in a turbulent environment. strategical management paradigms have shifted from essentially static to more dynamic worldviews (Scheepers, 200746).To summarise, in todays fast-paced competitive environment, firms face the need to be increasingly supple and adaptive (Ireland Webb, 200749). Ireland et al. (200153) state that successfully integrating entrepreneurial and strategic actions improves a firms ability to grow and create wealth. The following section elaborates on the relationship between entrepreneurship and strategic management and on how these two fields overlap.2.7 RELATIONSHIP BETWEEN STRATEGIC MANAGEMENT AND ENTREPRENEURSHIPWhile the fi elds of strategic management and entrepreneurship have developed largely independently of each other, they twain focus on how firms adapt to environmental change and exploit opportunities created by uncertainties and discontinuities in the creation of wealth (Hitt, Ireland, Camp Sexton, 2001480 Venkataraman Sarasvathy, 2001480). Creating wealth is at the heart of both entrepreneurship and strategic management. Figure 2.5 illustrates how firms create wealth by using entrepreneurial actions and strategic actions within different domains.Figure 2.5 Creating wealth through entrepreneurial and strategic actionsSOURCE Ireland et al., 200151As illustrated in Figure 2.5, firms can create wealth by using entrepreneurial actions and strategic actions within different domains. These domains are vital in the process of creating sustainable income streams by developing and exploiting competitive advantages. (Ireland et al., 200151). strategical management and entrepreneurship overlaps in term s of their interest in venture creation, novel strategies, growth and performance of organisations (Scheepers, 200746). Entrepreneurship involves identifying and exploiting entrepreneurial opportunities. However, to create the most value entrepreneurial firms also need to act strategically. An integration of entrepreneurial and strategic thinking is therefore necessary (Hitt et al., 2001479).In the antecedent section entrepreneurship was defined as the process of creating value by bringing together a unique combination of resources in order to exploit an opportunity (Barringer Ireland, 20065 Stevenson et al., 1989). As such, entrepreneurial actions, on the one hand, entail creating new resources or combining existing resources in new ways to develop and commercialise new products, move into new markets, and/ or service new customers (Hitt et al., 2001480). On the other hand, strategic management entails the set of commitments, decisions, and actions designed and executed to produc e a competitive advantage and earn above-average returns (Hitt et al., 2001480). Strategic management thus provides the context for entrepreneurial actions (Ireland, Hitt, Camp Sexton, 2001). Entrepreneurship is about creation strategic management is about how advantage is established and maintained from what is created (Venkataraman Sarasvathy, 2001).Entrepreneurship is concerned with how the opportunity to create value in society is discovered and acted upon by some individuals. Strategic management is concerned with the methods used to create this value and the ensuing struggle to capture a significant share of that value by individuals and firms (Venkataraman Sarasvathy, 2001650-651). Strategic Management has to do with the achievement of ends obtaining market share, profit and sustained competitive advantage. Then again, entrepreneurship has to do with the achievement of beginnings creating markets, firms and products (Venkataraman Sarasvathy, 2001651).Thus, entrepreneuri al and strategic perspectives should be integrated to examine entrepreneurial behaviour. For the purpose of the present study this approach is called strategic entrepreneurial behaviour (SEB). SEB is entrepreneurial action and behaviour with a strategic perspective. It is the integration of entrepreneurial (i.e. opportunity-seeking behaviour) and strategic (i.e. advantage-seeking behaviour) perspectives in developing and taking actions to create wealth (Hitt et al., 2001480-481).2.8 CHAPTER SUMMARYThis chapter attempts to provide perspective on the position of this study within the broad field of economics and business management. It defines the concept of business management as satisfying consumer needs with a limited amount of resources, through the planning, coordination, control, and motivation of these resources. Based on this definition of business management, the chapter provides an explanation of how business management stems from economics. Economics is defined as the alloc ation of scarce resources in order to fulfil the unlimited needs of society. This section leads to a discussion of the relationship between economics and business management. The main link between economics and business management is that the one studies the economic system as a whole, while the other studies a single component of that system.