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Incorporation of entrepreneurship and strategy leads to exceptional performance in organizations. In large corporations or organizations, strategic management has traditionally concerned itself with maximizing the use of resources and making prudent decisions regarding the allocation and utilization of existing resources. Entrepreneurship, on the other hand, is concerned with the identification of new needs and opportunities, proposing unexploited solutions and creating organizations.
The business world is made up of a broad range of entrepreneurs. However, in as much as there are many entrepreneurs who can be termed as successful, there is no specific formula that is used to achieve success (Tantau, 2008). To aid future entrepreneurs to be successful in their efforts in the entrepreneurial environment, there is need to provide them with an understanding of the reasons attached to success and failure of entrepreneurs. It is also important to note that entrepreneurship and innovation are vital in firms across all types of industries, regardless of the period they have been in the industry or size (Foss, and Lyngsie, 2011). This essay focusses on the concepts of strategic entrepreneurship and corporate entrepreneurship and discusses some of the issues that organizational manager’s experience when trying to adopt the approach to strategic management.
Strategic entrepreneurship is basically the carrying out of entrepreneurial activities using strategic perspectives. It is achieved by integrating strategic knowledge and entrepreneurship. The concept involves behaviors of simultaneously seeking exploitable opportunities and competitive advantage to develop and implement entrepreneurial strategies for purposes of creating wealth and profit (Djordjevic, 2013). The 21st century has thrived on entrepreneurial activities and has evolved to accommodate a competitive landscape, which comprises of organizations with a global marketplace, substantial change, complexity and significant uncertainty. Companies find it difficult to predict the future owing to the uncertain environment presented to them in the market. To counter the uncertainty, firms develop strategic flexibility that enables them to have a broad range of strategic options that can be adopted and implemented as required (Djordjevic, 2013). Development of the strategic flexibility requires companies to acquire resources and develop capabilities that give them the go ahead to take the appropriate actions to necessary for adaptation in dynamic environments. It is in such an environment that managers and entrepreneurs design, plan, and implement actions that create new markets while capturing existing ones from competitors that appear to be less innovative and aggressive.
Corporate entrepreneurship, on the other hand, is the process of developing new ideas and unexploited opportunities within already established businesses to directly lead to the improvement of profitability of an organization while enhancing the competitive position of an existing business as well as its strategic renewal. The process involves individuals in an existing organization developing an innovation or creating new ventures (Barringer, and Bluedorn, 1999). More broadly, corporate entrepreneurship is the sum total of an organization’s efforts directed towards renewal, innovation, and venturing. According to suggestions from evidential findings, facilitation of practices attached to corporate entrepreneurship is done through the effective use of a strategic management process and optimization of the human capital in a firm (Covin, and Miles, 2006). Corporate entrepreneurship activities can either be internally or externally oriented. Internal activities are described as the overall development within internal markets and independent units designed to expand innovative technologies, staff services and production methods within the firm. Typically, these activities cover innovations that relate to products, processes and the administration of the firm on various levels (Barringer, and Bluedorn, 1999). According to Schollhammer, internal entrepreneurship can be expressed in modes of strategies including; search and exploitation (opportunistic), management of research and consequent development (administrative), acquisition, imitation, and incubation. External entrepreneurship can be typified as the process of combining resources available in a surrounding with individual resources to create a new combination of resources that is independent of others. External efforts involve joint ventures, venture spin-off, mergers, and venture nurturing among others (Barringer, and Bluedorn, 1999).
There are numerous issues that managers are bound to experience while trying to adopt the approaches discussed above into the strategic management processes. One such issue is the entrepreneurial capabilities of the individuals in the organisation. Entrepreneurs can either surface at any level of the organisation or be independent (Tantau, 2008). As such, in trying to implement strategic entrepreneurship in an organisation, it is crucial that the employees involved think entrepreneurially. To ensure the success of such a process, top managers need to be committed and establish a culture based on entrepreneurship that inspires the individuals and groups involved to have their share of contribution in entrepreneurship.
Such is seen in the case of the late Steve Jobs of Apple Inc. He was committed to the effort of engaging employees in corporate entrepreneurship and believed that one of his key responsibilities was to help Apple grow and become more entrepreneurial (Tantau, 2008). In his leadership, Apple introduced various innovatively designed computer products such as the iMac that initially boasted of 15 inches display, resting on a base attached by a chrome swivel bar. Steve utilized the design that resembled a desk lamp to capture a larger share of the computer market, signaling one of the successful cases towards nurturing an entrepreneurial culture.
While setting up innovations and bringing them to being, managers are also faced with the issue of competition from firms in the same industry and it is up to them to be innovative and come up with ideas and products that capture the market ahead of their competitors. Typically, once an innovation is adopted, integrated into a product and released into the market for sale, competitors try to develop a similar functionality to keep up with the trend. For instance, the introduction of the iPhone in 2007 sparked the need to have cell phones with keyboards embedded in the touchscreen interphase. Other cellphone producers such as Samsung quickly took up an imitative strategy to stage a valid competition for Apple in the cell phone market by introducing its series of cell phones with touchscreen interfaces (Tantau, 2008).
Firm managers also get to experience the issue of having new companies in the industry that force them to review their operational strategies in regard to entrepreneurship. It is not a new concept that newer entrepreneurial firms are more often than not successful in identifying entrepreneurial opportunities than larger and existing firms (Ireland, Hitt, and Sirmon, 2003). It is believed that the new businesses acquire the success since most tend to be more innovative owing to their flexibility and willingness to engage in risky entrepreneurial activities. The corporate world has seen companies coming up and taking the market by storm, ultimately becoming as successful as their larger counterparts are. Such a case is that of Wiko, a European handset manufacturer that now competes fairly with other popular brands such as Samsung and iPhone in Europe. The same is also seen in China where handset brands such as OPPO, Apple and Samsung are almost at par in terms of popularity and usage, considering OPPO is fairly new in the market compared to the other two brands.
Managers may also experience failures as they invest in their efforts to adopt strategic and corporate entrepreneurship in the strategic management process. Numerous businesses and firms have collapsed causing enormous ramifications for shareholders, creditors, suppliers, and to some extent, the management theory. Implementation and adoption of unclear plans and strategies and lack of commitment towards the company goals cause most failures. One case of a business that collapsed is that of the Enron Corporation. Before its collapse, the company was celebrated widely owing to its purported innovative, ambitious and successful management model. The company utilized a model that had a balance of loose and tight management that used stretch goals.
Additionally, the company had a system that allowed it to attract and retain aggressive and creative individuals while encouraging internal entrepreneurship (Garvin, and Levesque, 2006). In such a case, managers ought to have the ability to separate the actions that led to the collapse from those actions that worked well for the company despite the presence of the ‘destroyer’ actions. They also need to understand the significant benefits acquired from internal entrepreneurship and the ways available to drive growth and corporate innovation while keeping an eye on the costs and risks linked to it.
Over the last years, managers have come to embrace the challenge that is corporate entrepreneurship. It is evident that companies cannot reduce their size to achieve more and rapid growth is impossible if all they do is tweak existing products, create subsidiaries in developing countries and take over rivals in the same market they operate. Growth is more guaranteed if the companies come up with, develop and sustain innovation (Covin, and Miles, 2006). They often face the situations of having to embrace new ideas that appear as risks and as such become reluctant to welcome new aspects in their operations. This is best described as managers or companies trapped in conventional thinking. There are numerous examples of companies that were/are reluctant to embrace innovation. These cases include General Motors (GM) and Ford’s reluctance to adopt the idea of hybrid cars, Polaroid’s resentful move into digital products such as cameras, wariness of Microsoft to open-source software, and the unfavorable reaction from media companies regarding blogs among others (Garvin, and Levesque, 2006).
Having embraced innovation and competing fairly with other competitors in the market, managers may tend to relax and put less effort in the improvement of the company’s products or services. Corporate entrepreneurs should accept the fact that innovation is an ongoing process that is limitless nature. They are advised to be on their guard in regard to the ways that competitors might gain an advantage over them at the expense of their relaxation. As such, when adopting strategic management and entrepreneurship approaches, managers ought to build their strategy on a sustainable competitive advantage. To make appropriate decisions regarding a competitive advantage that can be sustained, managers need to be aware of the major economic, legal, political and technological trends on both national and international levels.
While trying to adopt entrepreneurship approaches in strategic management, managers may also become overwhelmed by the dominance of the pressure of creating new businesses. Such a culture is overly inappropriate and invites losses in operations and financial discipline. A classic example of a firm that lost owing to such an operation tactic is Enron at the end of the 20th century (The 1990s). The company rewarded executives who showcased their ability to develop and introduce new trading businesses into the mold of its parent business, natural gas. The practice resulted in an outpouring of trading businesses – pulp and paper, water, broadband, coal, media services, semiconductors, data storage and freight services. These businesses made little sense in regard to finance and strategy. Of the numerous second and third generation businesses, very few earned reasonable profits, thus leading to the collapse of the company.
In summary, one of the key tasks of a manager in modern business is to foster and promote an environment in which entrepreneurial thinking is awarded and encouraged. Promoting such a culture in a company can be done by freely encouraging innovation and creativity. Managers that are motivated to take up strategic and corporate entrepreneurship must therefore strive to build trust, embrace the risk to fail and inspire individuals that look up to them to take similar risks, albeit calculated. However, for the inspiration to yield positive results, they should adopt a system that values continuous analysis and feedback. Far from theory, corporate entrepreneurship relates to strategic management in three ways; intrapreneurship – creating new businesses within an already existing company, strategic renewal – improving profitability by using new resources and combinations, and corporate entrepreneurship (Ferreira, 2001). With strategic entrepreneurship, strategic management perspectives pursue entrepreneurial activities. As such, the entrepreneurs apply strategic management models and methods to pursue new unexploited opportunities in a strategic manner using innovation and elements of corporate entrepreneurship.
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