Discussion Questions(DQs)
DQ 8.1. This lesson is about the
"new”--both new products or services and new organizations. Innovation and
entrepreneurship are fundamental to today's world economy. However, they also
pose difficult choices: be a first-mover or a fast-follower, as well as handling
takeover bids. Entrepreneurship is a fundamental organizational process, as all
businesses start as an act of entrepreneurship. Two main themes link
entrepreneurship with innovation: timing and relationships. Timing decisions
include when to be a first-mover or fast-second in innovation, and when, and
if, an innovation will reach its tipping point--the point where demand takes
off; and, for an entrepreneurial new venture. Creating innovations or new
organizations is very rarely done along. Successful innovation and
entrepreneurship are typically done through relationships. These relationships
come in many forms: sometimes relationships between organizations and their
customers; sometimes relationships between big business and small start-ups;
and sometimes between business and social entrepreneurs (entrepreneurs that
create new ventures to address social problems).
a. Compare and contrast
entrepreneurial ventures and small businesses?
b. Why are these organizations
important to a country's economy?
c. Describe the strategic management
process for these organizations.
d. Describe the specific strategic
issues that face entrepreneurial ventures and small businesses.
Be sure to support your work with specific citations from this week's Learning Resources and any additional sources.
Entrepreneurship
is all about creating new products/services that provides many jobs and
contribute to today’s economy. But it is always challenging for entrepreneurs
to be either a first-mover or a fast-follower. In order to succeed in the
world’s business, being a creative and innovative is one of the key to keep
alive in the long term. Timing and relationships play an important role in
order to achieve a higher market share.
a. Differences (Comparing and Contrasting)
between Entrepreneurial Ventures and Small Businesses
Although
many people think that entrepreneurial ventures and small businesses are same,
they are not the same and different in many ways. First, entrepreneurial
ventures are those organizations that convert the problems into opportunities
by assuming certain risks and rewards through innovative practices whereas
small businesses are those independently owned businesses with a few number of
people through similar practices used by other small businesses. Second, while
both business entities may small but entrepreneurial ventures are
growth-oriented and small business may depend on its choices. Third,
entrepreneurial ventures always strive to find
out
new opportunities, often innovative but small businesses strive to operate its
business on existing opportunities in an old fashion. Last but not the least;
entrepreneurial ventures are likely to contribute greatly to its country’s
economy while small businesses are less likely to contribute in comparison to
entrepreneurial ventures (Coulter, 2013) .
b. Importance of these organizations to a
country’s economy
Basically
there are many advantages of these small and entrepreneurial ventures that play
a pivotal role in improving country’s economy. First, Job creation is one of the major advantages that will greatly
contribute to a country’s economy. Some researches have shown that small
businesses and entrepreneurial ventures indirectly help to create more jobs in
the country. Second, Start Ups will
increase as entrepreneurial ventures increase. As a matter of fact, 500,000 new
businesses started each year regardless of recent economic downturn (Coulter,
2013) .
Third, these organizations are facilitating to Create Innovation that offers different things to contribute its
economic condition of the country. When innovation takes place, more advances
in the technology and life will come into play which will be beneficial for the
sound health of the country’s economy.
c. Strategic Management Process for these
organizations
Strategic
management process of these organizations includes several processes which must
be followed one after another. While it is true that several research have
shown that there is positive links of between planning and business
performance, entrepreneurships and small ventures are not likely to produce the
same results. In these organizations, people do not focus on elaborated
business plan, but instead, they make a “more practical approach” as they go
ahead. The major strategic process includes the following steps:
1.
Mission
Statement: First step of small ventures or entrepreneurship is to
define its vision, mission, objective and goals. It should deal with the reason
for existence in the marketplace.
2.
Situation
Analysis: It is important to understand the situation of the
business venture and entrepreneurships which can be done by doing a SWOT
analysis (Coulter, 2013) . External
environmental analysis helps the organizations to exploit opportunities and
threats whereas internal environmental analysis helps to figure out their
strengths and weaknesses. Understanding these, thus, would be helpful for
achieving a competitive advantage for these organizations.
3.
Strategy
Formulation: For these small ventures, Functional,
competitive, and overall plans should be made in order to improve its
capabilities, core competencies and achieve a competitive advantage. For
example, small businesses have no sufficient resources and capabilities to
operate its functional strategies. Likewise, it has limited competitive scope
of the firm so that it should only focus on either low cost or differentiation
strategy. In addition, small firms have no wide range of cooperate options
available to choose from as compared to larger companies.
4.
Strategy
Implementation: Once the strategies are formulated, they
need to be implemented by matching its organizational resources, capabilities,
budgets, structure, and culture with its vision, mission and objectives.
5. Strategy Evaluation: Last
but not the least, these organizations should be aware of measuring the
performance, deviating from standard set and their competitors and take
corrective actions.
d. Specific Strategic Issues Facing
Entrepreneurial Ventures and Small Businesses
It
is true that whether it is entrepreneurial ventures or small businesses, no
organizations can operate without human capital because only the moveable
resource which can manage other resources is its people. It is very hard for
these organizations to recruit, motivate, and retain the talented employees
within it. In contrast, large organizations often have a wide range of HR
strategic options. Another challenge for these organizations is to achieve a
competitive advantage by being flexible and innovative to compete with larger
organizations which can take advantage of economies of scale (Coulter,
2013) .
References
Coulter, M.
(2013). Strategic Management in Action (6 ed.). New Jersey, USA:
Pearson Education, Inc.
David, F. R. (2011 (13th ed.). Strategic
Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.
Pearce II, J.A.,& Robinson, R.B.
(2014(14th Edition)). Strategic Management: Competing for Domestic and
International planning. New York: McGraw-Hill Irwin.
8.
2. DQ Set 2:
a. What are the
typical sources of revenue for not-for-profits (NFP)?
b. Identify the main
types of NFPs?
c. Compare and
contrast the strategic management process for NFPs and for-profits.
d. Explain how
functional, competitive, and corporate strategies might be used in NFPs and
public sector organizations.
e. Discuss the specific strategic issues facing
NFPS.
a. The
types of sources of revenue for not-for-profit (NFP)
Not-for-profit (NFP) organization is an organization that provides goods
or services without intention of earning a profit (Coulter,
2013) .
A NFP organization is created, funded and regulated by the public sectors or government.
When it comes to its revenues, it is generated from a variety of sources, not
just from client receiving the product or service but it could also be from
people who do not even receive the services. Some of the important sources of
revenue for NFP include taxes, donations, permits, product sales, fees, and
charges; and grants (Coulter, 2013) . When revenues
exceed its expenses then there is surplus which is often used to improve the
products or services.
b. Types
of NFPs
The important types of Not-for-profit (NFPs) organizations are as
follows:
Public Sector Organizations, which are created, funded, and regulated by
the public sector or government. These organizations include governmental
offices, agencies, departments, and divisions at all levels-local, state and
federal. These are likely to provide public services that society needs to
exist and operate such as police protection, recreation facilities, and help
for needy and disable people, and laws and regulations to protect and enhance
people’s lives.
Despite these, there are other types of NFPs which include charitable
institutes (e.g. American Cancer Society, Children Miracle Network),
educational institutes(e.g. public schools, colleges and universities), Social
services (e.g. Nepal Red Cross, Camp Fire, Habitat for Humanity), religions
(e.g. Hindu, Churches and other religious associations), cultural and
recreational clubs (e.g. museums, dance troupes, parks, zoos, theaters), health
services (hospitals, medical clinics and other health organizations),
professional membership associations (e.g. Academy of management, American Bar
Associations), cause related (e.g. Save the Whales, Democratic National
Parties, Nature Conservancy), and foundations (e.g. Rockefeller Foundations,
Bill and Melinda Gates Foundations) (Coulter, 2013) .
c. Differences
between strategic management process for NFPs and for-Profits
Strategic management process is
important whether it is profit making or not-for-profit making organizations.
The reason for this is that they need to survive in the marketplace by
generating profit-for-profit making and revenues for not profit making. The
analysis of the external and internal environment for profit making
organization is complicated as compared to not-for-profit organizations. The
formulation, implementation and evaluation of strategies in profit making
organizations are basically oriented to earn a profit and market leadership
through market focus, differentiation and low cost provider whereas
not-for-profit organizations are oriented to serve the society by utilizing
available resources. However, strategic management process is important for
both types of organizations but how they are being used is quite different
according to their vision, mission, objectives, strategies and tactics to gain
a competitive advantage in the marketplace (Coulter, 2013) .
d. Functional,
competitive, and Corporate strategies used in NFPs and public sector
organizations
The functional, competitive and corporate strategies can also be used in
NFPs and Public sector organizations are as follows:
·
Functional Strategies: Functional strategies used by NPFs are
simple that use various organizational resources such as people, marketing and
its process to deliver its services products to its clients or members. In
these organizations, resources and capabilities are limited so they must be
managed by hiring talent people, effective operations and marketing services.
·
Competitive Strategies: NFP organizations must be aware about the
competitors’ actions and strategies so as to compete with them effectively.
They should focus on organizational strengths such as people, capital,
technology and process in order to exploit the market opportunities so as to
gain a competitive advantage. In order
to better understand the market, they should be analyzing the external
environment to response quickly to serve its clients or members.
·
Corporate Strategies: Corporate strategies of NFP organizations
include the growth and development policies, portfolio selection, and
continuity of its goal-oriented activities such as priority setting, targeting,
segmenting, and serving the valuable customers. NFPs basically focus on serving
the society to prolong its presence in the market by managing various
resources.
e. Specific
Strategic Issues Facing NFPs
Not-for-profit organizations have their unique purposes which are not
free from certain strategic issues. They are as follows:
·
There
can be misconceptions about no use of strategic management to these
organizations. While it is generally accepted that it can be useful for profit
organizations, there is still do not know how to use and why it is useful in
these NFPs organizations.
·
There are
challenges of managing multiple stakeholders in the public sectors. For
example, politics and political process often ignores the strategic plans,
decision and strategic actions are closely monitored, and decisions are made by
tax payers in the hope they own the organization.
·
It is
necessary to develop some unique strategies in order to respond to
environmental pressure because NFPs basically depend on variable and unpredictable
revenue sources. Thus, in order to cope with fast-changing environment, they
should develop strategies such as cause related marketing, marketing alliances,
and strategic piggy-hacking (Coulter, 2013) .
References
Coulter, M.
(2013). Strategic Management in Action (6 ed.). New Jersey, USA:
Pearson Education, Inc.
David, F. R. (2011 (13th ed.). Strategic
Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.
Pearce II, J.A.,& Robinson, R.B.
(2014(14th Edition)). Strategic Management: Competing for Domestic and
International planning. New York: McGraw-Hill Irwin.
(n.d.) Retrieved from
https://www.questia.com/library/journal/1P3-1604388301/achieving-strategic-advantage-and-organizational-legitimacy
The Case Study of "Nimbus Holdings Pvt. Ltd."
NIMBUS Holdings Pvt. Ltd. was established in the
year 1998 as a partnership with an objective of import and export of various
consumer products (foodstuffs). The original activities of the company mostly
include the import of consumer goods such as confectionary from India and
distributed all over the country through retail and wholesale. It was started
with only few people, and gradually shifted its business to agribusiness
sector.
It is true that NIMBUS has taken from a trading
company to one of the biggest agribusiness in Nepal to outperform its
competitors and be the first mover in the market. NIMBUS was considered as the
first pellet feed processing industry for poultry, cattle, swine and aqua with
its produce even exported to India. It is the first company to have a Nepal
Standard (NS) certification for poultry feed. Its laboratory has state of the
art amenities and was the first laboratory to be equipped with High Performance
Liquid Chromatography (HPLC) and Near Infrared Spectroscopy (NIR). NIMBUS
introduced the first vertical storage system-SILO and is also known as the
first agribusiness company to have an ISO 9001:2000 certification. The Nimbus
holdings includes following four sub-ventures:
·
Probiotech
Industries Pvt. Ltd.
·
Progeochem
Industries Pvt. Ltd.
·
Nimbus
International Co. Pvt. Ltd.
·
Nimbus Krishi
Kendra
• Mission: To provide quality, innovative, cost
effective products, and services to the market through a commitment to
excellence, a dedicated workforce and the adaptation of leading technologies.
• Vision: We envision ourselves to be a prominent
diversified business through higher quality of product, higher standard of
service, creating values for the Nepalese economy and the Company’s
stakeholder.
Let’s talk about how this enterprise was started.
Anand Bagaria, Founder and CEO of the Nimbus, is one of the leading
entrepreneurs with a clear cut vision to be the leader of agro-related
businesses. He started off as a feed supplement manufacturing unit, focusing on
exports to India; graduated to marketing feed supplements and veterinary
medicines in the local market followed by feed grains trading. All these
activities and experience led to the path of setting up a pellet feed mill in
2004, Probiotech Industries Pvt. Ltd, the first pellet feed mill in Nepal.
Nimbus, an Agribusiness Enterprise, for the last 10 years has been in the field
of Animal Health and Nutrition. It has its credit many firsts in the Animal
Health and Nutrition sector of Nepal. Today they are a 200 crore business with
more than 400 employees, 14 depots, 110 dealers, 500 sub- dealers, 6000 farmers
across the country. They also have worked with companies like Suguna, Godrej,
Shanthi Fortune, Ranbaxy (VENTEX-Pfizer) in India.
Strategic Issues
The major strategic issue for the company is
that Nepalese people are leaving their farming occupations so that overall
industry of farming is shrinking day by day which could adversely affect the
company’s performance and success. Other strategic issues include farming in
traditional way, lack of effective marketing, scarcity of skillful employees,
growing competitors, and political instability-Nepal bhand, strike, and
political chaos.
Analysis & Evaluation
In this part of analysis and evaluation, I will examine
some of the strategic analyses to measure and determine the strategic position
of the company.
The
enterprise’s competitive environment
Competitive environment is also called
operating environment or task environment that includes the close associates or
stakeholders which are highly important in achieving a competitive advantage (Coulter,
2013) .
The major competitive factors affecting NIMBUS are briefly discussed as
follows:
·
Competitive Position: It came to know that Nimbus has been able to
position itself as one of the leading in this agro-business in Nepal. In order
to compete with its competitors, it mainly focuses on the rural areas where its
most customers reside.
·
Customer Profiles and Market Changes: It is important to get insights regarding
customer profile and market changes so that it is necessary to conduct the
research regarding the products or customer needs and market changes. The
company is trying to provide goods and services to rural areas of Nepal as per
market changes.
·
Investors & Creditors: Investors and creditors are most important
sources of capita which can be used to leverage the growth and expansion. It is
known that Nimbus has been using three sources of funding such as bank loan,
government grant, and private equity.
·
Suppliers Relationship: Since Nimbus is agro-based businesses, it is
necessary to make a good relationship with its raw material suppliers. The
company has been receiving many supplies from Nepalese and Indian farmers and
instruments from other parts of the world. It has given more emphasis to it
local suppliers rather than foreign suppliers due to the time, costs and risks
involved while supplying these materials from there to its company, and to its
customers.
·
Labor Markets: The Company has been striving to hire the
talent people, recruit them, develop them through training, and retain them in
the company. The company believes that only effective work can be accomplished
with effective employees either in terms of knowledge, skills, abilities and
experiences.
Pro
Forma SWOT analysis
Every business operates within two
intersecting environments. One is the "internal environment," which
consists of the things that a business person can control (such as the type of
livestock or seed purchased, the feed or fertility method used, the farming
practices implemented). The other is the "external environment,"
which is made up of the factors that affect a business that a business owner
cannot control (costs of materials, changes in regulations, competitive
activities, and market changes). The Pro forma SWOT analysis of Nimbus can be
made as follows:
·
Strengths (S): In the last ten years, it has been able to
establish itself as a good and reliable brand in terms of quality. It has a
large network of farmers and dealers. It has about hundreds of dealers across
the country, mostly in rural areas.
·
Weakness (W): The market is unorganized in the country.
Still much of the people related to agriculture are using traditional methods
of agriculture. The low presence in social Medias has affected the company and
is not recognized by various young agribusiness entrepreneurs.
·
Opportunities (O): The Company has various opportunities in the
country. Firstly it can introduce itself as a multi bank teller by using its
connection of farmers and become a physical presence between financial
institutions and farmers. It can also become an organic feed producer by using
the technologies needed and convincing the customers. Last but not least, the
company is thinking of opening chains of chicken hubs and modern slaughter
houses for standardization of its operation.
·
Threats (T): The major threat for the company is the
political instability in the country. Due to this most of potential business is
laying low and the companies have to think hundred times while approaching for
something new. Lack of good infrastructure- storage facilities, market center
roads, telecommunication and irrigation networks are the major threats and problems
for Nimbus.
The
enterprise plan to grow in the next two years
Nimbus Group has been planning to execute its
important growth strategies in the next two years. Basically it is going to
implement its concentration strategy as it going to develop its products or
market in a profitable area (Coulter, 2013) . For this, the
company is planning to add some new products to its existing product line so as
to expand and cover wider market share. In order to focus on concentration,
Nimbus is going to use a combined strategic plan such as product-market
exploitation, product development and market development. In addition, the
company is going to use forward integrations, and diversification for some
products. Despite these, according to Bagaria, “Our next plan is to leverage
our rural network and attempt to provide rural population with micro financing
and micro banking which would essentially help the agriculture sector and
establish the company as a major catalyst in bringing another major change in
the agricultural sector of Nepal.”
The
owner’s strategic actions to promote growth
In order to promote a growth, the Company has been
developing some of the strategic actions to manage and implement these
strategically. For product-market exploitation, it will strive to increase
sales of current products or services in existing markets by providing some
incentives to its distributors or intensive advertising. In the same way, it
will be buying some new products and selling these in the existing markets in
order to promote the product development. Likewise, it will be selling its
existing products into some of profitable new markets which is called market
development (Coulter, 2013) . Despite these
concentrated actions, it will be also focusing on forward integrations in which
Nimbus will open its own distribution center in the different locations of
Nepal in order to sell the products to its ultimate consumers. Last but not the
least; the company is also diversifying its products in order to reduce its
risks after two years.
Summary, Conclusions & Recommendations
In nutshell, it can be said that NIMBUS’s primary
goal is to resolve the underlying strategic issues and problems such as decreasing
scope of farming industry and farmers in Nepal by deploying concentration
growth strategies after 2 years. It is believed that when these underlying
problems will be resolved, the company will automatically improve its profit
margin and its brand recognition all over Nepal. From the interview, it is
known that the company is going to increase the Market share by 15% by the end
of 1st year and collaborate with 150 new farming dealers/partners within 2
years.
The
following strategies suggestions are recommended to the owner, Anand Bagaria”
·
While
it is true that many young people are getting unemployed and going abroad for
earning purpose, they have not realized that agriculture could be an important
source of earning so that NIMBUS should strive to convince them that we can do something
impressive in the arena of agriculture in Nepal.
·
It is
true that many young people are making an unfavorable attitude towards
agriculture so that it is the right time to change their attitude from negative
to positive so that their behaviors can be changed. When their attitude will
change, their behavior or actions will also change and there is a higher
possibility to increase the profits as more and more customers will be coming
into this area.
·
The
company should hire talented employees, trained them and retain in the company
so that productivity and performance
will increase. It would be also good to make a good relationship with its key
stakeholders such as creditors, investors, customers, employees, government,
suppliers and so forth. Doing this would increase employees commitment,
customer loyalty, investor trust, favorable policies from government, and
timely delivery of raw materials from suppliers.
·
When
the scope of Nepalese farming industry is shrinking, the marketing activities
and other strategic collaboration or partnership would be beneficial in order
to achieve a competitive edge in the market.
References
Coulter, M.
(2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson
Education, Inc.
Pearce II, J.A.,& Robinson, R.B. (2014(14th
Edition)). Strategic Management: Competing for Domestic and International
planning. New York: McGraw-Hill Irwin.
(n.d.) Retrieved from https://dl.dropboxusercontent.com
/u/18400325/Entrepreneurs %20for%20
Nepal/E4N-nepali-entrepreneurs-handbook.pdf
(n.d.) Retrieved from http://www.nimbusnepal.com/#
