Management

Making the Move from Traditional to Online Retail

young couple shopping for electronics

Brick and mortar (B&M) retailers often face many daunting challenges as they attempt to develop an on-line presence.  Factors such as the stiff competition from online vendors and other B&Ms that have beat them to the punch, when it came to taking the plunge into online retailing, may be obstacles to their success.

Another hurtle is that many retailers and consumers and vendors are still stuck at a learning stage when it comes to internet shopping (Browne et al., 2004).  Many consumers particularly the “baby boomers”, as well as the generation behind them have yet to adopt the technology habits necessary for on-line shopping. Corporations had also shared this myopic viewpoint, as they struggled to get a grasp on the fast-paced information technology and e-commerce environment.

For other corporations, they struggled with the requisite skill-sets to deal with cyber-marketing. They just were not sure how to reach their target markets, after being dependent on print media, and radio and television advertising. Compound that fact with the fact that the afore-mentioned mediums themselves were in a state of flux, and many businesses found themselves without the tried and true marketing devices of a by-gone era. Additionally, B&Ms did not have an understanding of the customer service needs of an e- customer, prior to and after the sale.

Most telling was the B&M’s inability to deploy the logistics capabilities required in this new cyber environment. They found themselves unable to manage data, inventory, and other transactions that are integral to the success of a business.

The Future of Retail Is Here Now!

Why Consumers Shop Online

Wide variety of items.  Online sales are swiftly approaching $200 billion a year in the United States. The online percentage of total retail sales has gone from 5% in 2007 to 9% now (“Clicks and Bricks”, 2012). One of the many reasons is that the e-tailer is able to offer the consumer a far larger range of products.

Consider clothing, the B&M oftentimes just does not have the floor space to show the many items that the company offers. The e-tailer can feature different seasons, styles, as well as a wide range of color and sizes, particularly non-standard sizes.

The same can be said of the $99.5 billion spent on electronics by Americans yearly (Coster, 2010).  While consumers are often seeking “the latest and greatest” when they make a purchase, there is a huge market for refurbished and used electronics, as well as previous year’s models.  Once again, the B&M just does not have the physical space to display these items, other than say the occasional “open box’ or clearance item.

Convenience factor. An equally compelling reason for shopping online is the convenience factor (Browne et al., 2004). You have the ability at any time, or from anywhere, that you have Internet access, to shop for a hard to find electronic part, item of clothing, or this week’s groceries.  Further, you have the option to have your purchase delivered over-night, in a few days, or you can pick it up.

How Can the Brick and Mortar Compete?

Hybrid Bricks and Clicks Model

One method may be adopting a hybrid of the traditional B&M, and an on-line presence i.e. “clicks”, or bricks and clicks (B&C) (Prasarnphanich & Gillenson, 2003). In this model, there is a complete integration of both the online the B&M components, thus a pooling of resources and assets.  While there is the inevitability that there will be variances in pricing, product offerings, and exchange policies, these differences must be minimized as much as possible.

For B&C to be enjoyable by the consumer, the experience should be fairly easy and straightforward. To that end having shopping carts that they can place their items in, and then be able to add or delete items, is a huge plus.

When the order is complete, the customer should once again be able to add and delete items, as well as being made aware of any shipping and handling (S&H) costs and options, and taxes where applicable.

When payment is tendered, it is of the utmost importance that the customers’ financial information is secure, and that they are confident of that fact. They should also have multiple billing options, such as a credit / debit, card, PayPal, e-check, gift card, purchase orders, and other methods as appropriate.

With the sale confirmed, the item now needs to be delivered to the customer. In some instances, this may take the form of a download, as in software, music, or video. In most cases, the item is shipped to the customer, or may be picked up in the store. In either instance, consideration must be given to whether S&H costs are borne by the vendor, or the customer. They must also decide if S&H will be waived, if the customer elects to pick up the item in the store. Given fuel costs, the decision that they make may have a significant impact on their bottom line.

Information Technology Implications

Data Management

 Consumer data. An issue that B&Ms converting to a B&C may face is in managing the vast amounts of customer data they generate.  Mega-retailers like Wal-Mart, Target, Amazon, as well as many smaller retailers use their data warehouses to refine their marketing strategies and decision-support processes (Babcock, 2006). They are able to mine transactions to glean such information as; customer purchasing frequency and amounts, what marketing mechanism is most effective, what products sell well together, trends in products, detect fraudulent transactions, predict churn, et cetera.

  Inventory management. However, the transactional data gathered at the point of sale (POS), whether online or at the B&M can also lead to improved efficacy in financial forecasting as well as inventory management.  Wal-Mart is using Hewlett-Packard Co.'s (HP) Neoview data warehousing system in conjunction with its Retail Link system to process its one million customer transactions per hour, and to assist with Supply Chain Management (“Data, data everywhere”, 2010).

Both B&Ms and e-tailers must be concerned with managing their stock and the procurement of goods. Some purely on-line retailers rely on drop shipping to fulfill product demand (Chen et al. 2010). However, even with drop shipping the strictly online retailer will most likely not have the product variety of the B&C.  With B&Cs, the inventory will come from the inventory of the combined assets of the B&C, and the B&M, thus there is a strong likelihood that the item will be available somewhere in the supply chain.

Conclusion

 Love it or hate it, e-commerce is here to stay, and as the traditional retailer and consumer adjusts to it, they will find that it has benefits and challenges for the both of them. However, these challenges are far from insurmountable. The retailer must stay cognizant of the fact that they must still deliver the same level of customer care that they do in their B&Ms.  S/he must apply many of the same management doctrines that are used in the B&M. However, they must also realize that there are singular issues facing them, such as data management, logistics, and online security that is unique to e-commerce.

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Cost Benefit Analysis (CBA)

As is germane to the topic of risk management, a cost benefit analysis (CBA) is used to consolidate, assess and proffer the costs and benefits, and the intrinsic aspects of a project.

A CBA is primarily performed to ascertain if a project decision is a prudent one. The project feasibility is usually stated in monetary terms, as it’s metric i.e., system or standard of measurement. Thus the total calculated expenditure of the project is scrutinized against the total forecasted benefits, to see whether the benefits outweigh the costs, and if so, by what financial amount.

To illustrate the point,we will utilize Courtney’s annualized loss expectancy (ALE) formula (Suh & Han, 2002), which has been adopted by the US government for risk analysis. The (ALE) is determined by multiplying the annual rate of occurrence (ARO) by the single loss expectancy (SLE), and is expressed thusly:

ALE = ARO * SLE

At a site that we support, there are 20 laptops that are used in mobile labs, the laptops are valued at $1000 each, and the 2 carts that are used to store them, cost $500 each. In addition each laptop has Computrace tracking software that is billed at $50 / annually. The risk of theft or (SLE) is 10%.

Thus the (ALE) for all the laptops is: $2,200 = 10% * $22,000

The (ALE) for one laptop would be $1,100, which is more than the value of the laptop.

Given the amortization or reduction in value over time, of the laptop, with a constant (ARO) and (SLE), then cost-benefit wise, the existing method of securing the laptops, does not make sound fiscal sense, and causes the (ALE) to rise.

Then too, cost–benefit estimates may be skewed by the lack of objectivity on the part of the individuals affected by the analysis. We try to share with the director of the program that the laptop hardware / software specs have cause the laptops to lose value, but their perception is that since the laptops were rarely used, that they maintain their day-one value.

Another way to quantify cost-benefit values is through the following formula:

Costs ÷ Benefits > 1DF

If the costs of performing a project are markedly disproportionate to the benefits of that project, then it would not be prudent to proceed with that project. DF denotes a disproportion factor; therefore as DF rises above one, going further with the project becomes less advisable.

Suh, B. , & Han, I. (2002, December). The IS risk analysis based on a business model. Graduate School of Management, Korea Advanced Institute of Science and Technology,, 207-43.

 

Entrepreneur

Entrepreneurship is the process of designing, launching and running a new business which is often initially a small business and the people who create these businesses are called entrepreneurs.[1][need quotation to verify][2]

Entrepreneurship has been described as the "capacity and willingness to develop, organize and manage a business venture along with any of its risks in order to make a profit".[3] While definitions of entrepreneurship typically focus on the launching and running of businesses due to the high risks involved in launching a start-up, a significant proportion of businesses have to close due to "lack of funding, bad business decisions, an economic crisis, lack of market demand – or a combination of all of these.[4]

Elements

Entrepreneurs act as managers and oversee the launch and growth of an enterprise. Entrepreneurship is the process by which either an individual or a team identifies a business opportunity and acquires and deploys the necessary resources required for its exploitation. The exploitation of entrepreneurial opportunities may include:[5]

The economist Joseph Schumpeter (1883–1950) saw the role of the entrepreneur in the economy as "creative destruction" – launching innovations that simultaneously destroy old industries while ushering in new industries and approaches. For Schumpeter, the changes and "dynamic disequilibrium brought on by the innovating entrepreneur [were] the norm of a healthy economy".[6]

While entrepreneurship is often associated with new, small, for-profit start-ups, entrepreneurial behavior can be seen in small-, medium- and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary-sector groups, charitable organizations and government.[7]

Entrepreneurship may operate within an entrepreneurship ecosystem which often includes:

  • Government programs and services that promote entrepreneurship and support entrepreneurs and start-ups
  • Non-governmental organizations such as small-business associations and organizations that offer advice and mentoring to entrepreneurs (e.g. through entrepreneurship centers or websites)
  • Small-business advocacy organizations that lobby governments for increased support for entrepreneurship programs and more small business-friendly laws and regulations
  • Entrepreneurship resources and facilities (e.g. business incubators and seed accelerators)
  • Entrepreneurship education and training programs offered by schools, colleges and universities
  • Financing (e.g. bank loans, venture capital financing, angel investing and government and private foundation grants)[8][need quotation to verify]

In the 2000s, the definition of "entrepreneurship" expanded to explain how and why some individuals (or teams) identify opportunities, evaluate them as viable and then decide to exploit them, whereas others do not[9] and in turn how entrepreneurs use these opportunities to develop new products or services, launch new firms or even new industries and create wealth.[10] The entrepreneurial process is fundamentally uncertain because opportunities cannot be discovered or identified prior to their actualization into profits.[11] What appears as a real opportunity ex-ante might actually be a non-opportunity or one that cannot be actualized by entrepreneurs lacking the necessary business skills, financial or social capital.

Entrepreneurs tend to be good at perceiving new business opportunities and they often exhibit positive biases in their perception (i.e. a bias towards finding new possibilities and seeing unmet market needs) and a tendency towards risk-taking that makes them more likely to exploit the opportunity.[12][13] An entrepreneur may be in control of a commercial undertaking, directing the factors of production – the human, financial and material resources – that are required to exploit a business opportunity.

History

Historical usage

 
Emil Jellinek-Mercedes (1853–1918), here at the steering wheel of his Phoenix Double-Phaeton, was a European entrepreneur who helped design the first modern car

"Entrepreneur" (/ˌɒntrəprəˈnɜːr/ (About this sound listen)) is a loanword from French. The word first appeared in the French dictionary entitled Dictionnaire Universel de Commerce compiled by Jacques des Bruslons and published in 1723.[14] Especially in Britain, the term "adventurer" was often used to denote the same meaning.[15] The study of entrepreneurship reaches back to the work in the late 17th and early 18th centuries of Irish-French economist Richard Cantillon, which was foundational to classical economics. Cantillon defined the term first in his Essai sur la Nature du Commerce en Général, or Essay on the Nature of Trade in General, a book William Stanley Jevons considered the "cradle of political economy".[16][17] Cantillon defined the term as a person who pays a certain price for a product and resells it at an uncertain price, "making decisions about obtaining and using the resources while consequently admitting the risk of enterprise". Cantillon considered the entrepreneur to be a risk taker who deliberately allocates resources to exploit opportunities in order to maximize the financial return.[18][19] Cantillon emphasized the willingness of the entrepreneur to assume the risk and to deal with uncertainty, thus he drew attention to the function of the entrepreneur and distinguished between the function of the entrepreneur and the owner who provided the money.[18][20]

Dating back to the time of the medieval guilds in Germany, a craftsperson required special permission to operate as an entrepreneur, the small proof of competence (Kleiner Befähigungsnachweis), which restricted training of apprentices to craftspeople who held a Meister certificate. This institution was introduced in 1908 after a period of so-called freedom of trade (Gewerbefreiheit, introduced in 1871) in the German Reich. However, proof of competence was not required to start a business. In 1935 and in 1953, greater proof of competence was reintroduced (Großer Befähigungsnachweis Kuhlenbeck), which required craftspeople to obtain a Meister apprentice-training certificate before being permitted to set up a new business.[21]

20th century

In the 20th century, entrepreneurship was studied by Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. While the loan from French of the word "entrepreneur" dates to the 1850, the term "entrepreneurship" was coined around the 1920s. According to Schumpeter, an entrepreneur is willing and able to convert a new idea or invention into a successful innovation.[22] Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior offerings across markets and industries, simultaneously creating new products and new business models, thus creative destruction is largely responsible for long-term economic growth. The idea that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory[clarification needed] and as such continues to be debated in academic economics. An alternate description by Israel Kirzner suggests that the majority of innovations may be incremental improvements such as the replacement of paper with plastic in the construction of a drinking straw that require no special qualities.

For Schumpeter, entrepreneurship resulted in new industries and in new combinations of currently existing inputs. Schumpeter's initial example of this was the combination of a steam engine and then current wagon making technologies to produce the horseless carriage. In this case, the innovation (i.e. the car) was transformational, but did not require the development of dramatic new technology. It did not immediately replace the horse-drawn carriage, but in time incremental improvements reduced the cost and improved the technology, leading to the modern auto industry. Despite Schumpeter's early 20th-century contributions, the traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead of assuming that resources would find each other through a price system). In this treatment, the entrepreneur was an implied but unspecified actor, consistent with the concept of the entrepreneur being the agent of x-efficiency.

For Schumpeter, the entrepreneur did not bear risk: the capitalist did. Schumpeter believed that the equilibrium was imperfect. Schumpeter (1934) demonstrated that the changing environment continuously provides new information about the optimum allocation of resources to enhance profitability. Some individuals acquire the new information before others and recombine the resources to gain an entrepreneurial profit. Schumpeter was of the opinion that entrepreneurs shift the production possibility curve to a higher level using innovations.[23]

Initially, economists made the first attempt to study the entrepreneurship concept in depth.[24] Alfred Marshall viewed the entrepreneur as a multi-tasking capitalist and observed that in the equilibrium of a completely competitive market there was no spot for "entrepreneurs" as an economic activity creator.[25]

Millennial entrepreneurs

The term "millennial entrepreneur" refers to a business owner who is affiliated with the generation that was brought up using digital technology and mass media—the products of Baby Boomers, those people born during the 1980s and early 1990s. Also known as Generation Y, these business owners are well equipped with knowledge of technology and have a strong grasp of its applications toward businesses. There have been many breakthrough businesses that have come from millennial entrepreneurs such as Mark Zuckerberg, who created Facebook.[26][27] Despite the expectation of millennial success, there have been recent studies that have proven this to not be the case. The comparison between millennials who are self-employed and those who are not self-employed shows that the latter is higher. The reason for this is because they have grown up in a different generation and attitude than their elders. Some of the barriers to entry for entrepreneurs are the economy, debt from schooling and the challenges of regulatory compliance.[28]

2000s

In 2012, Ambassador-at-Large for Global Women's Issues Melanne Verveer greets participants in an African Women's Entrepreneurship Program at the State Department in Washington, D.C.

In the 2000s, entrepreneurship has been extended from its origins in for-profit businesses to include social entrepreneurship, in which business goals are sought alongside social, environmental or humanitarian goals and even the concept of the political entrepreneur.[according to whom?] Entrepreneurship within an existing firm or large organization has been referred to as intrapreneurship and may include corporate ventures where large entities "spin-off" subsidiary organizations.[29]

Entrepreneurs are leaders willing to take risk and exercise initiative, taking advantage of market opportunities by planning, organizing and deploying resources,[30] often by innovating to create new or improving existing products or services.[31] In the 2000s, the term "entrepreneurship" has been extended to include a specific mindset (see also entrepreneurial mindset) resulting in entrepreneurial initiatives, e.g. in the form of social entrepreneurship, political entrepreneurship or knowledge entrepreneurship.

According to Paul Reynolds, founder of the Global Entrepreneurship Monitor, "by the time they reach their retirement years, half of all working men in the United States probably have a period of self-employment of one or more years; one in four may have engaged in self-employment for six or more years. Participating in a new business creation is a common activity among U.S. workers over the course of their careers".[32] In recent years, entrepreneurship has been claimed as a major driver of economic growth in both the United States and Western Europe.

Entrepreneurial activities differ substantially depending on the type of organization and creativity involved. Entrepreneurship ranges in scale from solo, part-time projects to large-scale undertakings that involve a team and which may create many jobs. Many "high value" entrepreneurial ventures seek venture capital or angel funding (seed money) in order to raise capital for building and expanding the business.[33] Many organizations exist to support would-be entrepreneurs, including specialized government agencies, business incubators (which may be for-profit, non-profit, or operated by a college or university), science parks and non-governmental organizations, which include a range of organizations including not-for-profits, charities, foundations and business advocacy groups (e.g. Chambers of commerce). Beginning in 2008, an annual "Global Entrepreneurship Week" event aimed at "exposing people to the benefits of entrepreneurship" and getting them to "participate in entrepreneurial-related activities" was launched.[who?]

Relationship between small business and entrepreneurship

The term "entrepreneur" is often conflated with the term "small business" or used interchangeably with this term. While most entrepreneurial ventures start out as a small business, not all small businesses are entrepreneurial in the strict sense of the term. Many small businesses are sole proprietor operations consisting solely of the owner—or they have a small number of employees—and many of these small businesses offer an existing product, process or service and they do not aim at growth. In contrast, entrepreneurial ventures offer an innovative product, process or service and the entrepreneur typically aims to scale up the company by adding employees, seeking international sales and so on, a process which is financed by venture capital and angel investments. Successful entrepreneurs have the ability to lead a business in a positive direction by proper planning, to adapt to changing environments and understand their own strengths and weakness.[34]

Ethnic entrepreneurship

The term "ethnic entrepreneurship" refers to self-employed, business owners who belong to racial or ethnic minority groups in the United States and Europe. A long tradition of academic research explores the experiences and strategies of ethnic entrepreneurs as they strive to integrate economically into mainstream U.S. or European society. Classic cases include Jewish merchants and tradespeople in large U.S. cities in the 19th and early 20th centuries as well as Chinese and Japanese small business owners (restaurants, farmers, shop clerks) on the West Coast.[35]

In the 2010s, ethnic entrepreneurship has been studied in the case of Cuban business owners in Miami, Indian motel owners of the U.S. and Chinese business owners in Chinatowns across the United States. While entrepreneurship offers these groups many opportunities for economic advancement, self-employment and business ownership in the United States remain unevenly distributed along racial/ethnic lines.[36] Despite numerous success stories of Asian entrepreneurs, a recent statistical analysis of U.S. census data shows that whites are more likely than Asians, African-Americans and Latinos to be self-employed in high prestige, lucrative industries.[36]

Institutional entrepreneur

The American-born British economist Edith Penrose has highlighted the collective nature of entrepreneurship. She mentions that in modern organizations, human resources need to be combined in order to better capture and create business opportunities.[37] The sociologist Paul DiMaggio (1988:14) has expanded this view to say that "new institutions arise when organized actors with sufficient resources [institutional entrepreneurs] see in them an opportunity to realize interests that they value highly".[38] The notion has been widely applied.[39][40][41][42]

Cultural entrepreneurship

According to Christopher Rea and Nicolai Volland, cultural entrepreneurship is "practices of individual and collective agency characterized by mobility between cultural professions and modes of cultural production". In their book The Business of Culture (2015), Rea and Volland identify three types of cultural entrepreneur: "cultural personalities", defined as "individuals who buil[d] their own personal brand of creativity as a cultural authority and leverage it to create and sustain various cultural enterprises"; "tycoons", defined as "entrepreneurs who buil[d] substantial clout in the cultural sphere by forging synergies between their industrial, cultural, political, and philanthropic interests"; and "collective enterprises", organizations which may engage in cultural production for profit or not-for-profit purposes.[43]

Feminist entrepreneur

A feminist entrepreneur is an individual who applies feminist values and approaches through entrepreneurship, with the goal of improving the quality of life and wellbeing of girls and women.[44] Many are doing so by creating "for women, by women' enterprises". Feminist entrepreneurs are motivated to enter commercial markets by desire to create wealth and social change, based on the ethics of cooperation, equality and mutual respect.[45][46]

Entrepreneurial behaviors

   British entrepreneur Karren Brady has an estimated net worth of $123 million. The entrepreneur is commonly seen as an innovator—a designer of new ideas and business processes. Management skills and strong team building abilities are often perceived as essential leadership attributes for successful entrepreneurs. Political economist Robert Reich considers leadership, management ability and team-building to be essential qualities of an entrepreneur.

Uncertainty perception and risk-taking

Dell Women's Entrepreneur Network event in New York City.Theorists Frank Knight[52] and Peter Drucker defined entrepreneurship in terms of risk-taking. The entrepreneur is willing to put his or her career and financial security on the line and take risks in the name of an idea, spending time as well as capital on an uncertain venture. However, entrepreneurs often do not believe that they have taken an enormous amount of risks because they do not perceive the level of uncertainty to be as high as other people do. Knight classified three types of uncertainty:
  • Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls)
  • Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but an unknown number of white balls)
  • True uncertainty or Knightian uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose contents are entirely unknown)
  Malala Yousafzai, a Pakistani activist, social entrepreneur and the youngest-ever Nobel Peace Prize winner, was named in the Forbes 30 list

Entrepreneurship is often associated with true uncertainty, particularly when it involves the creation of a novel good or service, for a market that did not previously exist, rather than when a venture creates an incremental improvement to an existing product or service. A 2014 study at ETH Zürich found that compared with typical managers, entrepreneurs showed higher decision-making efficiency and a stronger activation in regions of frontopolar cortex (FPC) previously associated with explorative choice.[53]

"Coachability" and advice taking

The ability of entrepreneurs to work closely with and take advice from early investors and other partners (i.e. their coachability) has long been considered a critical factor in entrepreneurial success.[54] At the same time, economists have argued that entrepreneurs should not simply act on all advice given to them, even when that advice comes from well-informed sources, because entrepreneurs possess far deeper and richer local knowledge about their own firm than any outsider. Indeed, measures of coachability are not actually predictive of entrepreneurial success (e.g. measured as success in subsequent funding rounds, acquisitions, pivots and firm survival). This research also shows that older and larger founding teams, presumably those with more subject expertise, are less coachable than younger and smaller founding teams.

Strategies

Strategies that entrepreneurs may use include:

  • Innovation of new products, services or processes[55]
  • Continuous process improvement (CPI)[55]
  • Exploration
  • Use of technology[55]
  • Use of business intelligence
  • Use of economical strategics
  • Development of future products and services[55]
  • Optimized talent management[55]

Designing individual/opportunity nexus

According to Shane and Venkataraman, entrepreneurship comprises both "enterprising individuals" and "entrepreneurial opportunities", so researchers should study the nature of the individuals who identify opportunities when others do not, the opportunities themselves and the nexus between individuals and opportunities.[56] On the other hand, Reynolds et al.[57] argue that individuals are motivated to engage in entrepreneurial endeavors driven mainly by necessity or opportunity, that is individuals pursue entrepreneurship primarily owing to survival needs, or because they identify business opportunities that satisfy their need for achievement. For example, higher economic inequality tends to increase entrepreneurship rates at the individual level, suggesting that most entrepreneurial behavior is based on necessity rather than opportunity.[58]

Opportunity perception and biases

The ability of entrepreneurs to innovate relates to innate traits, including extroversion and a proclivity for risk-taking.[59] According to Joseph Schumpeter, the capabilities of innovating, introducing new technologies, increasing efficiency and productivity, or generating new products or services, are characteristic qualities of entrepreneurs.[60] One study has found that certain genes affecting personality may influence the income of self-employed people.[61] Some people may be able to use[weasel words] "an innate ability" or quasi-statistical sense to gauge public opinion[62] and market demand for new products or services. Entrepreneurs tend to have the ability to see unmet market needs and underserved markets. While some entrepreneurs assume they can sense and figure out what others are thinking, the mass media plays a crucial role in shaping views and demand.[63] Ramoglou argues that entrepreneurs are not that distinctive and that it is essentially poor conceptualizations of "non-entrepreneurs" that maintain laudatory portraits of "entrepreneurs" as exceptional innovators or leaders [64][65] Entrepreneurs are often overconfident, exhibit illusion of control, when they are opening/expanding business or new products/services.[12]

Styles

Differences in entrepreneurial organizations often partially reflect their founders' heterogenous identities. Fauchart and Gruber have classified entrepreneurs into three main types: Darwinians, communitarians and missionaries. These types of entrepreneurs diverge in fundamental ways in their self-views, social motivations and patterns of new firm creation.[66]

Communication

Entrepreneurs need to practice effective communication both within their firm and with external partners and investors in order to launch and growth a venture and enable it to survive. An entrepreneur needs a communication system that links the staff of her firm and connects the firm to outside firms and clients. Entrepreneurs should be charismatic leaders, so they can communicate a vision effectively to their team and help to create a strong team. Communicating a vision to followers may be well the most important act of the transformational leader.[67] Compelling visions provide employees with a sense of purpose and encourage commitment. According to Baum et al.[68] and Kouzes and Posner,[69] the vision must be communicated through written statements and through in-person communication. Entrepreneurial leaders must speak and listen to effectively articulate their vision to others.[70]

Communication is pivotal in the role of entrepreneurship because it enables leaders to convince potential investors, partners and employees about the feasibility of a venture.[71] Entrepreneurs need to communicate effectively to shareholders.[72]Nonverbal elements in speech such as the tone of voice, the look in the sender's eyes, body language, hand gestures and state of emotions are also important communication tools. The Communication Accommodation Theory posits that throughout communication people will attempt to accommodate or adjust their method of speaking to others.[73]Face Negotiation Theory describes how people from different cultures manage conflict negotiation in order to maintain "face".[74] Hugh Rank's "intensify and downplay" communications model can be used by entrepreneurs who are developing a new product or service. Rank argues that entrepreneurs need to be able to intensify the advantages of their new product or service and downplay the disadvantages in order to persuade others to support their venture.[75]

Links to sea piracy

Research from 2014 found links between entrepreneurship and historical sea piracy. In this context, the claim is made for a non-moral approach to looking at the history of piracy as a source of inspiration for entrepreneurship education[76] as well as for research in entrepreneurship[77] and business model generation.[78]

Psychological makeup

   Apple co-founder and longtime leader Steve Jobs (pictured in 2010) led the introduction of many innovations in the computer, smartphone and digital music industry

Stanford University economist Edward Lazear found in a 2005 study that variety in education and work experience was the most important trait that distinguished entrepreneurs from non-entrepreneurs[79] A 2013 study by Uschi Backes-Gellner of the University of Zurich and Petra Moog of the University of Siegen in Germany found that a diverse social network was also important in distinguishing students that would go on to become entrepreneurs.[80][81]

Studies show that the psychological propensities for male and female entrepreneurs are more similar than different. Empirical studies suggest that female entrepreneurs possess strong negotiating skills and consensus-forming abilities.[82] Asa Hansson, who looked at empirical evidence from Sweden, found that the probability of becoming self-employed decreases with age for women, but increases with age for men.[83] She also found that marriage increased the probability of a person becoming an entrepreneur.[83]

Jesper Sørensen wrote that significant influences on the decision to become an entrepreneur are workplace peers and social composition. Sørensen discovered a correlation between working with former entrepreneurs and how often these individuals become entrepreneurs themselves, compared to those who did not work with entrepreneurs.[84] Social composition can influence entrepreneurialism in peers by demonstrating the possibility for success, stimulating a "He can do it, why can't I?" attitude. As Sørensen stated: "When you meet others who have gone out on their own, it doesn't seem that crazy".[85]

Entrepreneurs may also be driven to entrepreneurship by past experiences. If they have faced multiple work stoppages or have been unemployed in the past, the probability of them becoming an entrepreneur increases[83] Per Cattell's personality framework, both personality traits and attitudes are thoroughly investigated by psychologists. However, in case of entrepreneurship research these notions are employed by academics too, but vaguely. According to Cattell, personality is a system that is related to the environment and further adds that the system seeks explanation to the complex transactions conducted by both—traits and attitudes. This is because both of them bring about change and growth in a person. Personality is that which informs what an individual will do when faced with a given situation. A person's response is triggered by his/her personality and the situation that is faced.[86]

Innovative entrepreneurs may be more likely to experience what psychologist Mihaly Csikszentmihalyi calls "flow". "Flow" occurs when an individual forgets about the outside world due to being thoroughly engaged in a process or activity. Csikszentmihalyi suggested that breakthrough innovations tend to occur at the hands of individuals in that state.[87] Other research has concluded that a strong internal motivation is a vital ingredient for breakthrough innovation.[88] Flow can be compared to Maria Montessori's concept of normalization, a state that includes a child's capacity for joyful and lengthy periods of intense concentration.[89] Csikszentmihalyi acknowledged that Montessori's prepared environment offers children opportunities to achieve flow.[90] Thus quality and type of early education may influence entrepreneurial capability.

Research on high-risk settings such as oil platforms, investment banking, medical surgery, aircraft piloting and nuclear power plants has related distrust to failure avoidance.[91] When non-routine strategies are needed, distrusting persons perform better while when routine strategies are needed trusting persons perform better. This research was extended to entrepreneurial firms by Gudmundsson and Lechner.[92] They argued that in entrepreneurial firms the threat of failure is ever present resembling non-routine situations in high-risk settings. They found that the firms of distrusting entrepreneurs were more likely to survive than the firms of optimistic or overconfident entrepreneurs. The reasons were that distrusting entrepreneurs would emphasize failure avoidance through sensible task selection and more analysis. Kets de Vries has pointed out that distrusting entrepreneurs are more alert about their external environment.[93] He concluded that distrusting entrepreneurs are less likely to discount negative events and are more likely to engage control mechanisms. Similarly, Gudmundsson and Lechner found that distrust leads to higher precaution and therefore increases chances of entrepreneurial firm survival.

Researchers Schoon and Duckworth completed a study in 2012 that could potentially help identify who may become an entrepreneur at an early age. They determined that the best measures to identify a young entrepreneur are family and social status, parental role modeling, entrepreneurial competencies at age 10, academic attainment at age 10, generalized self-efficacy, social skills, entrepreneurial intention and experience of unemployment.[94]

Entrepreneurship

Entrepreneurship is the act of being an entrepreneur, or "an owner or manager of a business enterprise who makes money through risk and initiative".[95] Early 19th century French economist J.B. Say provided a broad definition of entrepreneurship, saying that it "shifts economic resources out of an area of lower and into an area of higher productivity and greater yield". Entrepreneurs create something new, something different—they change or transmute values.[96] Regardless of the firm size, big or small, they can partake in entrepreneurship opportunities.

The opportunity to be an entrepreneur arises with the fulfillment of four criteria. First, there must exist opportunities or situations in which people believe that they can use new means-ends frameworks to recombine resources to generate profit. Second, entrepreneurship requires differences between people. Specifically, the preferential access to or ability to recognize information about opportunities. Third, risk bearing is a necessary part of the entrepreneurial process. Fourth, the entrepreneurial process requires the organization of people and resources.[97]

The entrepreneur is a factor in microeconomics and the study of entrepreneurship reaches back to the work of Richard Cantillon and Adam Smith in the late 17th and early 18th centuries, but was largely ignored theoretically until the late 19th and early 20th centuries and empirically until a profound resurgence in business and economics in the last forty years. In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. According to Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The supposition that entrepreneurship leads to economic growth is an interpretation of the residual in endogenous growth theory and as such is hotly debated in academic economics. An alternate description posited by Israel Kirzner suggests that the majority of innovations may be much more incremental improvements such as the replacement of paper with plastic in the construction of a drinking

Some scholars have constructed an operational definition of a more specific subcategory called "Strategic Entrepreneurship". Closely tied with principles of strategic management, this form of entrepreneurship is "concerned about growth, creating value for customers and subsequently creating wealth for owners".[98]

A 2011 article for the Academy of Management provided a three-step, "Input-Process-Output" model of strategic entrepreneurship. The model's three steps entail the collection of different resources, the process of orchestrating them in the necessary manner and the subsequent creation of competitive advantage, value for customers, wealth and other benefits. Through the proper use of strategic management/leadership techniques and the implementation of risk-bearing entrepreneurial thinking, the strategic entrepreneur is therefore able to align resources to create value and wealth.[98]

Leadership in entrepreneurship

Leadership in entrepreneurship can be defined as "process of social influence in which one person can enlist the aid and support of others in the accomplishment of a common task"[99] in "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods".[97] This refers to not only the act of entrepreneurship as managing or starting a business, but how one manages to do so by these social processes, or leadership skills. Entrepreneurship in itself can be defined as "the process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without being immediately constrained by the resources they currently control".[100] An entrepreneur typically has a mindset that seeks out potential opportunities during uncertain times.[100] This leads us to see that an entrepreneur must have leadership skills or qualities in order to see potential opportunities and act upon them. At the core, an entrepreneur is a decision maker. Such decisions often affect an organization as a whole, which is representative of their leadership amongst the organization.

According to Fisher (1970), there are four phases of decision-making: orientation, conflict, emergence and reinforcement.[101] As a communicative approach, the orientation stage is where the members involved are becoming acquainted both with themselves as well as the problem at hand. The conflict stage is where the problem is analyzed with several possibilities presented to resolve the problem. Upon discussing these possibilities, the emergence phase becomes known when a decision is made about which solution is to be used. The reinforcement stage is the supportive of the decision.[102] These phases are not without objection from many theorists in the field. Morley and Stephenson (1977) claim that such a staged model of decision-making is not so rigid between phases and varies depending upon the types of decisions made.[103]

With the growing global market and increasing technologies throughout all industries, the core of entrepreneurship and the decision-making has become an ongoing process rather than isolated incidents This becomes knowledge management which is "identifying and harnessing intellectual assets" for organizations to "build on past experiences and create new mechanisms for exchanging and creating knowledge".[104] This belief draws upon a leader's past experiences that may prove useful. It is a common mantra for one to learn from their past mistakes, so leaders should take advantage of their failures for their benefit. This is how one may take their experiences as a leader for the use in the core of entrepreneurship- decision making.

Global leadership and entrepreneurship

It is important to note that the majority of scholarly research done on these topics have been from North America.[105] Words like "leadership" and "entrepreneurship" do not always translate well into other cultures and languages. For example, in North America a leader is often thought to be charismatic, but German culture frowns on such charisma due to the charisma of Adolph Hitler. Other cultures, like some Europeans, view the term "leader" negatively, like the French.[106] The participative leadership style that is encouraged in the United States is considered disrespectful in many other parts of the world due to the differences in power distance.[107] Many Asian and Middle Eastern countries do not have "open door" policies and would never informally approach their managers/bosses. For countries like that, an authoritarian approach to management and leadership works best as is custom.

Despite cultural differences, the successes and failures of entrepreneurs can be traced to how leaders adapt to local conditions.[108] With the increasingly global environment a successful leader must be able to make these adaptations and have some insight into other cultures. In response to the environment, corporate visions are becoming transnational in nature due to the changes an organization must make in order to operate or provide services/goods for other cultures.[109]

Educational effects

Michelacci and Schivardi[110] are a pair of researchers who believe that identifying and comparing the relationships between an entrepreneur's earnings and education level would determine the rate and level of success. Their study focused on two education levels, college degree and post-graduate degree. While Michelacci and Schivardi do not specifically determine characteristics or traits for successful entrepreneurs, they do believe that there is a direct relationship between education and success, noting that having a college degree does contribute to advancement in the workforce.

Michelacci and Schivardi state there has been a rise in the number of self-employed people with a baccalaureate degree. However, their findings also show that those who are self-employed and possess a graduate degree has remained consistent throughout time at about 33 percent. They briefly mention those famous entrepreneurs like Steve Jobs and Mark Zuckerberg who were college dropouts, but they call these cases all but exceptional as it is a pattern that many entrepreneurs view formal education as costly, mainly because of the time that needs to be spent on it. Michelacci and Schivardi believe that in order for an individual to reach the full success they need to have education beyond high school. Their research shows that the higher the education level the greater the success. The reason is that college gives people additional skills that can be used within their business and to operate on a higher level than someone who only "runs" it.

Project entrepreneurship

Project entrepreneurs are individuals who are engaged in the repeated assembly or creation of temporary organizations.[111] These are organizations that have limited lifespans which are devoted to producing a singular objective or goal and get disbanded rapidly when the project ends. Industries where project-based enterprises are widespread include: sound recording, film production, software development, television production, new media and construction.[112] What makes project-entrepreneurs distinctive from a theoretical standpoint is that they have to "rewire" these temporary ventures and modify them to suit the needs of new project opportunities that emerge. A project entrepreneur who used a certain approach and team for one project may have to modify the business model or team for a subsequent project.

Project entrepreneurs are exposed repeatedly to problems and tasks typical of the entrepreneurial process.[113] Indeed, project-entrepreneurs face two critical challenges that invariably characterize the creation of a new venture: locating the right opportunity to launch the project venture and assembling the most appropriate team to exploit that opportunity effectively. Resolving the first challenge requires project-entrepreneurs to access an extensive range of information needed to seize new investment opportunities. Resolving the second challenge requires assembling a collaborative team that has to fit well with the particular challenges of the project and has to function almost immediately to reduce the risk that performance might be adversely affected.

Another type of project entrepreneurship involves entrepreneurs working with business students to get analytical work done on their ideas.

Financing

Bootstrapping

At least early on, entrepreneurs often "bootstrap-finance"[114] their start-up rather than seeking external investors from the start. One of the reasons that some entrepreneurs prefer to "bootstrap" is that obtaining equity financing requires the entrepreneur to provide ownership shares to the investors. If the start-up becomes successful later on, these early equity financing deals could provide a windfall for the investors and a huge loss for the entrepreneur. If investors have a significant stake in the company, they may as well be able to exert influence on company strategy, chief executive officer (CEO) choice and other important decisions. This is often problematic since the investor and the founder might have different incentives regarding the long-term goal of the company. An investor will generally aim for a profitable exit and therefore promotes a high-valuation sale of the company or IPO in order to sell their shares. Whereas the entrepreneur might have philanthropic intentions as their main driving force. Soft values like this might not go well with the short-term pressure on yearly and quarterly profits that publicly traded companies often experience from their owners.

One consensus definition of bootstrapping sees it as "a collection of methods used to minimize the amount of outside debt and equity financing needed from banks and investors".[115] The majority of businesses require less than $10,000 to launch,[116] which means that personal savings are most often used to start. In addition, bootstrapping entrepreneurs often incur personal credit-card debt, but they also can utilize a wide variety of methods. While bootstrapping involves increased personal financial risk for entrepreneurs, the absence of any other stakeholder gives the entrepreneur more freedom to develop the company. Many successful companies, including Dell Computer and Facebook, started by bootstrapping.[117]

Bootstrapping methods include:[118]

Additional financing

Many businesses need more capital than can be provided by the owners themselves. In this case, a range of options is available including a wide variety of private and public equity, debt and grants.[119] Private equity options include:

Debt options open to entrepreneurs include:

Grant options open to entrepreneurs include:

Effect of taxes

Entrepreneurs are faced with liquidity constraints and often lack the necessary credit needed to borrow large amounts of money to finance their venture.[122] Because of this, many studies have been done on the effects of taxes on entrepreneurs. The studies fall into two camps: the first camp finds that taxes help and the second argues that taxes hurt entrepreneurship.

Cesaire Assah Meh found that corporate taxes create an incentive to become an entrepreneur to avoid double taxation.[122] Donald Bruce and John Deskins found literature suggesting that a higher corporate tax rate may reduce a state's share of entrepreneurs.[123] They also found that states with an inheritance or estate tax tend to have lower entrepreneurship rates when using a tax-based measure.[123] However, another study found that states with a more progressive personal income tax have a higher percentage of sole proprietors in their workforce.[124] Ultimately, many studies find that the effect of taxes on the probability of becoming an entrepreneur is small. Donald Bruce and Mohammed Mohsin found that it would take a 50 percentage point drop in the top tax rate to produce a one percent change in entrepreneurial activity.[125]

Predictors of success

Factors that may predict entrepreneurial success include the following:[126]

Methods

  • Establishing strategies for the firm, including growth and survival strategies
  • Maintaining the human resources (recruiting and retaining talented employees and executives)
  • Ensuring the availability of required materials (e.g. raw resources used in manufacturing, computer chips, etc.)
  • Using that the firm has one or more unique competitive advantages
  • Ensuring good organizational design, sound governance and organizational coordination
  • Congruency with the culture of the society[127]

Market

  • Business-to-business (B2B) or business-to-consumer (B2C) models can be used
  • High growth market
  • Target customers or markets that are untapped or missed by others

Industry

  • Growing industry
  • High technology impact on the industry
  • High capital intensity
  • Small average incumbent firm size

Team

  • Large, gender-diverse and racially diverse team with a range of talents, rather than an individual entrepreneur
  • Graduate degrees
  • Management experience prior to start-up
  • Work experience in the start-up industry
  • Employed full-time prior to new venture as opposed to unemployed
  • Prior entrepreneurial experience
  • Full-time involvement in the new venture
  • Motivated by a range of goals, not just profit
  • Number and diversity of team members' social ties and breadth of their business networks

Company

  • Written business plan
  • Focus on a unified, connected product line or service line
  • Competition based on a dimension other than price (e.g. quality or service)
  • Early, frequent intense and well-targeted marketing
  • Tight financial controls
  • Sufficient start-up and growth capital
  • Corporation model, not sole proprietorship

Status

  • Wealth can enable an entrepreneur to cover start-up costs and deal with cash flow challenges
  • Dominant race, ethnicity or gender in a socially stratified culture[128]

Is The STEM Crisis A Myth

 stem education

STEM fields or STEM education is an acronym for the fields of study in the categories of science, technology, engineering, and mathematics.The term is typically used in addressing education policy and curriculum choices in schools from kindergarten through college to improve the nation's competitiveness in technology development. It has implications for workforce development, national security concerns and immigration policy.

The definitions of the purview of STEM, and what is excluded, varies from organization to organization. In the broader definition, STEM degrees includes the fields of Chemistry, Computer and Information Technology Science, Engineering, Geosciences, Life Sciences, Mathematical Sciences, Social Sciences, Physics, and STEM Education and Learning Research.

Jobs

November 2012 - White House announcement before congressional vote on STEM Jobs Act puts president in opposition to many of the Silicon Valley firms and executives who bankrolled his re-election campaign.The Department of Labor identifies fourteen sectors that are "projected to add substantial numbers of new jobs to the economy or affect the growth of other industries or are being transformed by technology and innovation requiring new sets of skills for workers.

Advanced Manufacturing, Automotive, Construction, Financial Services, Geospatial Technology, Homeland Security, Information Technology, Transportation, Aerospace, Biotechnology, Energy, Healthcare, Hospitality and Retail.

The Department of Commerce notes STEM fields careers are some of the best-paying and have the greatest potential for job growth in the early 21st century. The report also notes that STEM workers play a key role in the sustained growth and stability of the U.S. economy, and training in STEM fields generally results in higher wages, whether or not they work in a STEM field.

SWOT Analysis

SWOT analysis (alternatively SWOT Matrix) is a structured planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. A SWOT analysis can be carried out for a product, place, industry or person. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective. The technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute (now SRI International) in the 1960s and 1970s using data from Fortune 500 companies.[1][2] The degree to which the internal environment of the firm matches with the external environment is expressed by the concept of strategic fit.

Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.

  • Strengths: characteristics of the business or project that give it an advantage over others
  • Weaknesses: are characteristics that place the team at a disadvantage relative to others
  • Opportunities: elements that the project could exploit to its advantage
  • Threats: elements in the environment that could cause trouble for the business or project

Identification of SWOTs is important because they can inform later steps in planning to achieve the objective.

First, the decision makers should consider whether the objective is attainable, given the SWOTs. If the objective is not attainable a different objective must be selected and the process repeated.

Users of SWOT analysis need to ask and answer questions that generate meaningful information for each category (strengths, weaknesses, opportunities, and threats) to make the analysis useful and find their competitive advantage.

Matching and converting

One way of utilizing SWOT is matching and converting. Matching is used to find competitive advantage by matching the strengths to opportunities. Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. An example of conversion strategy is to find new markets. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.

Internal and external factors

SWOT analysis aims to identify the key internal and external factors seen as important to achieving an objective. The factors come from within a company's unique value chain. SWOT analysis groups key pieces of information into two main categories:

  1. internal factors – the strengths and weaknesses internal to the organization
  2. external factors – the opportunities and threats presented by the environment external to the organization

Analysis may view the internal factors as strengths or as weaknesses depending upon their effect on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses (distractions, competition) for another objective. The factors may include all of the 4Ps; as well as personnel, finance, manufacturing capabilities, and so on.

The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or in competitive position. The results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade its users to compile lists rather than to think about actual important factors in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong threats.

It is prudent not to eliminate any candidate SWOT entry too quickly. The importance of individual SWOTs will be revealed by the value of the strategies they generate. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

Use

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study/survey.

Criticism

Some findings from Menon et al. (1999)  and Hill and Westbrook (1997) have shown that SWOT may harm performance. Other complementary analyses have been proposed, such as the Growth-share matrix.

SWOT - landscape analysis

The SWOT-landscape grabs different managerial situations by visualizing and foreseeing the dynamic performance of comparable objects according to findings by Brendan Kitts, Leif Edvinsson and Tord Beding (2000).

Changes in relative performance are continually identified. Projects (or other units of measurements) that could be potential risk or opportunity objects are highlighted.

SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations).

SWOT landscape

Corporate planning

As part of the development of strategies and plans to enable the organization to achieve its objectives, that organization will use a systematic/rigorous process known as corporate planning. SWOT alongside PEST/PESTLE can be used as a basis for the analysis of business and environmental factors.

  • Set objectives – defining what the organization is going to do
  • Environmental scanning
    • Internal appraisals of the organization's SWOT, this needs to include an assessment of the present situation as well as a portfolio of products/services and an analysis of the product/service life cycle
  • Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors
  • Strategic Issues defined – key factors in the development of a corporate plan which needs to be addressed by the organization
  • Develop new/revised strategies – revised analysis of strategic issues may mean the objectives need to change
  • Establish critical success factors – the achievement of objectives and strategy implementation
  • Preparation of operational, resource, projects plans for strategy implementation
  • Monitoring results – mapping against plans, taking corrective action which may mean amending objectives/strategies.

Marketing

Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. Accordingly, management often conducts market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:

  • Qualitative marketing research, such as focus groups
  • Quantitative marketing research, such as statistical surveys
  • Experimental techniques such as test markets
  • Observational techniques such as ethnographic (on-site) observation
  • Marketing managers may also design and oversee various environmental scanning and competitive intelligence processes to help identify trends and inform the company's marketing analysis.

Below is an example SWOT analysis of a market position of a small management consultancy with specialism in HRM.

Strengths Weaknesses Opportunities Threats
Reputation in marketplace Shortage of consultants at operating level rather than partner level Well established position with a well defined market niche Large consultancies operating at a minor level
Expertise at partner level in HRM consultancy Unable to deal with multi-disciplinary assignments because of size or lack of ability Identified market for consultancy in areas other than HRM Other small consultancies looking to invade the marketplace

 

What Would You Do

ethics

Many sites, non-profits, small businesses that we support, have no Acceptable Use Policies (AUP) or they are poorly enforced.  As such, invariably we will find an end-user that is misusing the computer or network, and putting the company at risk. Some abuse is fairly innocuous; they may be shopping on E-bay, or Amazon, or watching YouTube, and for others the abuse is far more severe.

However, one of the most pervasive problems that we encounter is peer-to-peer (P2P) downloading of illegal material. Less savvy users will use FrostWire, eMule, and Gnutella clients, with the savvier user opting for the BitTorrent protocol, and Usenet.

What these end-users do not realize is that streaming media and downloading material saps bandwidth. Additionally, P2P networks may introduce code that would permit remote access to computer files, or otherwise compromise the integrity of the network.  In addition to this, for the business, and the individual there may be criminal consequences as a result of violating Federal or State laws. There may also be financial ramifications, in the form of civil suits brought by the RIAA and MPAA, and other trade associations.

Ethical Considerations

How Decisions Are Made

Translated from the ancient Greeks, ethics refers to ones’ theory of life. In answering the question “How should I live?” a person engages in a consideration of ethics---that is thinking about what is right and what is wrong (Wicks et al., 2009). However, the code of human ethics is as varied as our fingerprints, with no two people having the same set of values. Yes, there are some precepts that are universally accepted; however there is no consensus amongst people on the copying of software.

The dynamics of ethics.  For some people, their ethics are based upon their religious foundation. They base their actions, and how they conduct themselves, on what they have been taught, and have internalized into their belief system. As is germane to this case, most of the various world religions espouse the viewpoint "that one should not steal". However, there are things that one's religion may tell a person that they should do, that they will not.  Thus, there must be other forces that influence our ethical decisions.

One could suggest that we are ethical because it is the lawful thing to do. However, there have been many laws that have been unethical.  Alternatively, we conduct ourselves in a certain ethical manner because that is how everyone else in our society conducts himself or herself. However, even within a family, state, or between nations, there can be many variations in ethical values.  

Our ethical journey.  There is no definitive answer to why we attempt to conduct ourselves in an ethical manner; some posit that it is due to the evolution of ethics (Bromberg, 2011).  As humankind evolved, people may have realized that persistent conflict could threaten their survival.  As humans started to live in closer proximity to one another, there needed to be regulating systems that kept strife and contention to a minimum. Therefore, we as a species have developed customs, protocols, and laws that aid in guiding relationships among people. Ultimately, this evolution has led to utilitarian ethics, that our decisions and actions should result in the most good and least harm, for those that are affected.

Legal Sanctions

Intellectual Property Law

In the present case there are additional considerations besides the ethical ones, and they are the legal consequences of our action or inaction.

As regards international regulation of intellectual property, there is the RIPS Agreement, the World Intellectual Property Organization (WIPO) Internet Treaties and the Berne Convention standards that signatory countries have committed themselves to.

In the United States, Title 17 of the U.S. Code provides copyright protection to original works of authorship, to a wide variety of mediums. Copyright protection is provided under the purview of 17 USC § 102 to: literary works; musical works, including any accompanying words; dramatic works, including any accompanying music; pantomimes and choreographic works; pictorial, graphic, and sculptural works; motion pictures and other audiovisual works; sound recordings; and architectural works.

17 USC § 501 - Infringement of copyright .  Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122 or of the author as provided in section 106A(a), or who imports copies of phonograph records into the United States in violation of section 602, is an infringer of the copyright or right of the author.

Further, under 17 USC § 506, it is a criminal offense for any  person to willfully infringe upon a copyright, and they shall be punished as provided under section 2319 of title 18, if the infringement was committed —

(A) for purposes of commercial advantage or private financial gain;

(B) by the reproduction or distribution, including by electronic means, during any 180-day period, of 1 or more copies or phonograph records of 1 or more copyrighted works, which have a total retail value of more than $1,000; or

(C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

At a minimum a court may grant temporary or final injunctions to prevent or restrain infringement of a copyright. Additionally, the court may order the impounding, on such terms as it may deem reasonable, of all copies of phonograph records claimed to have been made or used in violation of the copyright owner's exclusive rights,

As regards statutory damages, the copyright owner may elect, at any time before final judgment is rendered, to recover, instead of actual damages and profits, an award of statutory damages for all infringements involved in the action, with respect to any one work, for which any one infringer is liable individually, or for which any two or more infringers are liable jointly and severally, a sum of not less than $750 or more than $30,000 as the court considers just.

In a case where the copyright owner sustains the burden of proving, and the court finds, that infringement was committed willfully, the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000. In a case where the infringer sustains the burden of proving, and the court finds, that such infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright, the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.

Counterfeiting. If the individual were also to be engaged in counterfeiting any of the afore-mentioned, then 18 USC § 2320 - Trafficking in counterfeit goods or services, would apply. The offense of counterfeiting is to intentionally traffic in goods or services and knowingly uses a counterfeit mark on or in connection with such goods or services.  The penalties are: If an individual, a fine of not more than $2,000,000 or imprisoned not more than 10 years, or both. If not  an individual, then a fine of not more than $5,000,000; and for a second or subsequent offense, if an individual, shall be fined not more than $5,000,000 or imprisoned not more than 20 years, or both, and if other than an individual, shall be fined not more than $15,000,000.

No Electronic Theft Act, Pub. L. No. 105-147, 111 Stat. 2678 (NET Act).  In the case under discussion, the NET Act, a federal law passed in 1997, which governs the illegal copying of computer software, could also apply.  The NET Act mandates that it is a federal crime to reproduce, disseminate, or share copies of digital copyrighted works such as software applications, music, movies, or games.  The law also states that even if the individual copying or disseminating the material does not receive financial remuneration, or with a commercial intent, that they are in violation of this law.

 The law stipulates a maximum penalty of three years in prison and a $250,000 fine, for an individual, and a $500,000 fine for a business. The law also establishes a recidivist provision that increases penalties up to 6 years for second and subsequent copyright infringement offenses.  A less severe violation would result in a misdemeanor, with a maximum sentence of up to one year in prison and / or a fine of up to $25,000 for individuals and $100,000 for a business entity.

The Digital Millennium Copyright Act (DMCA). The DMCA amends United States copyright law, to criminalize the production and distribution of technology that allows users to circumvent copy-protection methods. The DMCA stipulates that a person or business injured, may file for relief via a civil action in federal court.

It is a criminal offense to knowingly violate the DMCA for commercial or financial gain. Penalties are up to a $500,000 fine or a maximum of five years imprisonment for a first offense.  For subsequent offenses, there is a maximum $1,000,000 fine or up to 10 years imprisonment.

The Digital Millennium Copyright Act (DMCA) also requires that upon notification that someone on their ISP is disseminating copyrighted material, that the ISP must take steps to have the content removed. At a minimum this can result in a user receiving a DMCA order to cease and desist disseminating the material, or face the loss of ISP use. For a business entity, this may mean the temporary or permanent loss of the use of that particular ISP,

Trade Associations

Business Software Alliance (BSA). An initiative of the BSA provides rewards for reporting illegal use of software.  A reward may be payable if the BSA pursues an investigation and, as a direct result of the information provided that there is a monetary settlement from the reported organization. The amount of the reward is outlined in the table below.

BSA Reward Payment Guidelines

Settlement paid by Company

Potential Reward payment

$15,000 - $100,000

Up to $5,000

      $100,001 - $200,000

Up to $10,000

$200,001 - $400,000

Up to $20,000

      $400,001 - $600,000

Up to $30,000

$600,001 - $800,000

Up to $40,000

      $800,001 - $1,000,000

Up to $50,000

$1,000,001 - $2,000,000

Up to $100,000

$2,000,001 - $3,000,000

Up to $150,000

$3,000,001 - $5,000,000

Up to $250,000

$5,000,001 - $10,000,000

Up to $500,000

$10,000,001 - $15,000,000

Up to $750,000

Over $15,000,000

Up to $1,000,000

 

This could be applicable to the issue of our end-users storing software on our network , if the end user piracy is committed by the business entity installing, or allowing, unlicensed software on computers that it owns or leases for its employees to use in their work. However, it would not extend to piracy committed by individuals installing unlicensed software on their own computers for home or other personal use outside of their employment.

The Software & Information Industry Association (SIIA).  The SIIA provides rewards of up to $1 million, for verifiable illicit software use by a corporation.  There are also rewards if the piracy is occurring over the Internet via a website, newsgroup, auction site, P2P network, FTP site, IRC, or BBC.

 

Conclusions

The issue off end-users placing illegal music and video on their computers and on the network is not a hypothetical scenario for us, rather it is one that we deal with regularly. Many of the end-users that we support see no harm in it, and tend to ignore us when we advise them of the consequences.

When we are faced with addressing this issue with the end-user, and their management, we do not feel that it is apropos to couch our argument in ethical terms. This is due to the fact that everyone’s code of ethics is different, and also because it is very easy for the person to rationalize their actions by stating “that no one is being harmed”.

However, we view our role to the business entity as someone that is entrusted to protect it against threats both externally, and internally. As such, we share with them the legal and financial consequences as outlined in this report. Additionally, we lock down the firewalls and put in place other measures to prevent the activity from re-occurring.

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