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Programme Title  

BUSINESS MANAGEMENT ENTRPRENEURSHIP

YEAR 2

Module Title  

ENTREPRENEURSHIP

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Coursework Title  

FreeMarket Solutions Inc.

BUSINESS PROPOSAL

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Business Proposal: FreeMarket Solutions Inc:

Introduction

The report mainly serves to discuss the setting up of a new business venture named FreeMarket Solutions Inc., which specializes in enabling corporate firms that are based on the traditional business model to establish a digital presence and take part in electronic commerce. The company will mainly deal in designing and setting up a website that serves as a virtual and online market place where various businesses can sellers can showcase their products and interested consumers can visit the website to identify their preferred products and services. Consequently, it enables them to exploit the immense opportunities that are presented by having a digital presence (Cuervo, 2010). The traditional business model mainly entails setting up a physical office where all business functions are conducted. What serves as a good illustration is the local supermarket where the management mainly houses all items in a physical premise and customers are forced to travel to the premise to do their shopping. In essence all business transaction are conducted within the company premises and thereby limiting the business’ capabilities to the precincts of the building.

Business theory holds that for a firm to compete effectively, it has to remain agile and responsive to the changes in the market. The contemporary market is increasing shifting from the overreliance of the physical market towards the adoption of the virtual technologies that has been facilitated by the technological advancements and specifically the World Wide Web. Consequently, the business opportunity to establish FreeMarket Solutions Inc. is based on the increasing need by the businesses and organizations that are based on the traditional physical model to adapt with the market dynamics by establishing an internet presence and taking advantages of the myriad opportunities that are presented by electronic commerce (Nambisan, 2016).

Theory of Opportunity

Alertness

Kirzner mainly develops the concept of entrepreneurship based on Mises’ human action theory. The underlying premise of Kirzner’s theory of entrepreneurship is the need to remain alert at all times. Maintaining keenness facilitates the discovery of aspects that hold significant value to the satisfaction of human wants. The underpinning objective of entrepreneurs is based on the ability to remain alert to the emerging and unnoticed opportunities. By remaining keen, entrepreneurs are able to discover and exploit opportunities and thereby making sales on high prices while maintaining low operational costs. According to Kirzner, maintaining keenness on profitable opportunities implies arbitrage activities. Touching on the concept of arbitrageurship, the arbitrage theory of profit holds that whenever there are disequilibrium conditions in a given market, then profitable opportunities come to existence. One of the principle pursuits of entrepreneurs is, therefore, to discover and exploit the opportunities and consequently shifting the economy towards equilibrium (Lundström and Stevenson, 2010). The concept of alertness and opportunity identification takes up the central place in explaining the reason behind setting up FreeMarket Solutions Inc. in essence, the creation of the business was facilitated by the entrepreneurial ability of the investor to remain alert and keen to the market trends, identify the existing opportunities and formulate the manner in which to capitalize and exploit the existing market opportunity. With the inception and increasing use and penetration of the internet, a new market mainly referred to as the electronic commerce otherwise referred to as Ecommerce emerged.

Ecommerce refers to the activity of conducting business transactions and activities via the internet. The activity mainly entails the sale and purchase of products and services on the internet and mainly through a company website. An ecommerce website, which basically serves as an online store, is designed with features that make it easy for the customers to scheme through the products on offer, identify their desired products and then making the necessary payments through the same website. In essence, the online store enables the customer to browse the products and services on offer at a convenient and remote location without necessarily having to travel to the store to purchase the products or services. In contrast to a traditional brick and mortar store, an ecommerce holds immense benefits and opportunities for both the seller and the consumer, which are explained below.

Comprehensive description of the commodities on offer

An electronic commerce website makes it possible for the seller to provide the customers with data sheets that clearly explain all the features and aspects of the commodity on offer. Also referred to as the product catalogue, the data sheets contain information that is critical in the decision making when purchasing a given commodity. For instance, product catalogue further contains reviews and ratings by other customers who have previously purchased and utilized the commodity. Therefore, the knowledge plays a critical role in enabling the customers to make an informed decision regarding the commodities they purchase (Shane, 2007).

Conveniently available through search engines

The traditional brick and mortar stores normally operate through intensive branding and strong relationships between the stores’ management and the various stakeholders. However, an ecommerce website mainly thrives by increasing the number of visitors to the site who normally find it by performing simple searches using search engines.

Statistics indicate that search engines normally perform billions of searches for people around the world in need of commodities they intend to purchase. The traditional brick and mortar store is plagued by myriad of challenges in the attempt to access such a large market. However, an online store easily access such a market as the website makes it possible for customers from both local and remote locations to easily access the commodities on offer.

At this juncture it is equally important to note the need for search engine optimization (SEO) for FreeMarket Solutions Inc.’s website. When performing a simple search using the popular search engines such as Google and Bing, the engines normally return thousands if not millions of results that are normally displayed in different pages. Researches indicate that users normally click on the first few results on the first page with minimal interest on the second or subsequent pages. Therefore, the management of FreeMarket Solutions Inc. intends to hire professionals to perform quality SEO’s on the company website in the effort of ensuring that it is displayed as one of the top results by search engines. Being on the first page of the results makes it possible to have attain higher traffic, which translates to more customers and more revenue for the business.

Decreased operational costs in terms of maintaining and managing inventory

The use of the traditional brick and mortar store is associated with the need to manage the existing inventory. The process is normally time consuming and labor intensive. The management of physical inventory is consequently tedious, costly and may result in errors in the records. However, managing inventory in an ecommerce website is rather less capital intensive and time consuming and normally results in highly accurate records.

An online store offers the owner with a wide range of features and facilities that make it possible to automate various responsibilities. For instance, an online store makes it possible to automate inventory management where the system normally performs all the relevant functions such as calculating the number of products sold, returned, and remaining in real time. Consequently, the automation processes allows the management to concentrate on other critical functions while decreasing the overall operational costs and risks.

Records the purchasing habits of customers

Market information is vital to the success of any business venture that operates in a highly competitive market. One of the main sources of competitive advantage is the ability to attain customer satisfaction. Customer satisfaction is mainly attained through gaining information on the purchasing habits of the customers in addition to their feedback. The traditional brick and mortar store makes it challenging to gather and analyze the items purchased by a given customer or customer segment in addition to the frequency of the purchases. However, an ecommerce store makes it relatively easy to compute and identify the purchasing habits of both distinctive customers and customer segments. Moreover, the website records the activities of each visitor such as the items views, the pages visited, in addition to the specific items that are purchased. Access to such information makes it possible for the online store owners to learn the needs and desires of the customer base and consequently redesign the product offerings in manner that it is tailored to meet the specific needs of a specific customer or customer segment. Consequently, the online store owners are able to improve on their customer relations and consequently being able to develop customer loyalty and the number of return customers.

The computerized nature of the business model enhances its accuracy and competency

With proper maintenance, it is possible to operate an electronic commerce website 14 hours a day, 7 days a week, and all year round without experiencing any form of downtime or decrease in operational efficiency. In contrast, the same is not possible for a traditional brick and mortar store since the workforce is bound to experience fatigue, which consequently compromises the efficiency and accuracy of the operations. The attempt to institute multiple shifts further increases the operational costs in addition to introduction heightened employee related issues such as conflicts. The computerized system that is characteristic to an online store automates most of the processes such as inventory management and hence decreasing the need for human resources. The savings made on a decreased workforce can be reinvested into the business to improve on customer efficiency in addition to maintaining the system.

Entrepreneurial Theories

Economic Perspectives

The concept of entrepreneurship is one that is highly multifaceted. There exists a diverse, varied, and relatively contradictory approach to the concept of entrepreneurship. One of the most significant approaches to entrepreneurship is the economic perspective. Interesting to note is that despite its significance, a review of the existing literature fails to offer much correlation between economics and entrepreneurship. This section of the paper attempts to explain the economic perspective of entrepreneurship and further connects the economic perspective to the establishment of FreeMarket Solutions Inc.

The economic perspective is primarily founded on a number of specific economic variables with the most prominent being innovation, risk bearing, and resource mobilization. At this juncture, it is important to point out that accumulating the factors of production does not necessarily bring about or rather explains economic development. Although the factors are necessary in production they are not necessarily enough to ensure production and economic growth takes place.

Human creativity and productive entrepreneurship are important in putting together and organizing the various inputs to come up with a profitable business venture. Furthermore, human creativity and productive entrepreneurship further facilitate the institution of an environment that supports free entrepreneurship and by extension acting as important factors in the growth of an economy. Therefore, the entrepreneurial agent and entrepreneurship ought to play a center role as far as long term economic development is concerned.

Innovation/Creativity

The approach holds that the entrepreneurs play the role of identifying and executing new combinations of productive resources. The underpinning ingredient, which involves executing the new combination or innovation, mainly serves to distinguish entrepreneurs from non-entrepreneurs. While the establishment or creation of new business ventures serves as the fundamental form of entrepreneurship, it is important to note that other forms also exist. Entrepreneurship further involves the commencement of changes that take the form of subsequent development in the level of goods produced and in the existing structure or form of organizational relationships.

With the above regard, FreeMarket Solutions Inc. takes up a highly creative and innovative business model. The company shifts from the traditional approach where goods and services are mainly traded on a physical premise or platform to a digital one where buyers and sellers can make their transactions online via the company’s website. In essence, the sellers simply have to post images of their commodities on the firm’s website accompanied with proper explanations after which the prospective buyers simply go scheme through all the items on sale in search of their preferred commodity. Important to note is that all the respective activities are undertaken at the convenient locations of the relevant players.

Additionally, a review of the existing literature on entrepreneurship reveals a number of critiques regarding the use of organization creation as a measure of entrepreneurship. One of the prevailing arguments is that organizations such as social groups, associations, and political parties are normally established by individuals who are not necessarily entrepreneurs. Interestingly, the terms entrepreneur and entrepreneurship have also been employed by various scholars to imply the spirit and innovation of the time. The main attempt is therefore, to use the term entrepreneurial thinking to imply modern workplace strategies that are team oriented. The members of such groups (social groups, associations, and political parties) therefore, could be referred to as entrepreneurial teams. Moreover, the activities that are carried out by such groups appear to have succeeded and flourished over the recent past and are increasingly being referred to as social entrepreneurship.

In accordance with the above thought, FreeMarket Solutions Inc. will mainly comprise of a well-integrated and cohesive workforce that works as a team. The organizational structure is primarily a shift from the traditional centralized approach where each employee worked independently with minimal interaction with other and all reporting to a central management. The organizational structure will mainly comprise of employees working as a cohesive team where each employee is considered an active and important team member with clearly laid down duties and responsibilities that are geared towards attaining the overall goals of the organizations.

Risk Taking

Risk taking is another significant economic variable that serves to influence the economic perspective. Risk taking serves as a fundamental distinguishing factor between entrepreneurs and non-entrepreneurs. In essence, successful entrepreneurs are considered calculated risk takers in that although they do engage in some level of risk, the risks taken are taken into careful consideration and proper management strategies put in place to ensure that they do not result into adverse implications that further hinder the success of the venture. Entrepreneurs bear a significant amount of risk that is founded on the level of uncertainty present in market dynamics. The entrepreneur does not necessarily risk the capital invested in the venture but also aspects such as reputation (Praszkier and Nowak, 2012).

FreeMarket Solutions Inc. is therefore an entrepreneurial venture since its establishment and operations are characterized by a significant level of risk. At first, the business venture is mainly driven by technological innovations, a field that that is dominated by highly disruptive business models. The increasing technological innovations have resulted in the emergence of new business ventures that serve to disrupt the market and take down well-established firms. As a consequence, although the current venture is based on a highly novel concept, it is quite possible that in the future, another firm may exploit the prevailing technological innovations that serve to disrupt the market and render the firm’s services and business model obsolete. Additionally, the entrepreneur is further risking his or her reputation at risk by setting up the firm since it will be pegged on the success or failure of the firm. In the contemporary world, most individuals, firms, and organizations are taking careful consideration of whom they want to be associated with and hence a negative reputation may serve as a significant hindrance to future opportunities.

Resource Mobilization

Resource mobilization is embellished in the alertness of the entrepreneur to identify profitable opportunities in the economy. Resource mobilization refers to the accrual and allocation of resources of opportunities where the entrepreneur plays the primary role of identifying the existing opportunities. In this sense, entrepreneurs are distinguished by their ability to identify the existing challenges, shocks and opportunities in the market, mobilize the required resources and allocated them strategically with the aim of capitalizing on the opportunities.

In accordance with resource mobilization, the establishment of FreeMarket Solutions Inc. is based on the identification of a market need and the mobilization of the necessary resources to exploit the identified opportunity. As an entrepreneur, the founder of the firm identified a market need that is based on the cumbersome nature of the traditional business model of selling and purchasing commodities (Casson, 2010). The traditional concept requires the sellers to put up physical premises that house their commodities and the prospective buyers to travel to the physical premise in order to purchase the desired commodity. Resource mobilization in establishing FreeMarket Solutions Inc. involves identifying the necessary resources, making the relevant plans to acquire them, and consequently allocating the resources in a strategic manner with the aim of capitalizing on the existing market opportunity.

As far as funding is concerned, a number of sources have been identified, which include owner’s savings and loans from financial institutions. Moreover, in the event the above sources of funding are not sufficient, partnerships and the sale of equity will also be taken into consideration. A second step to resource mobilization mainly involves allocating the available resources in accordance with the existing needs. Important to note is that resources are normally limited in nature and hence the need to ensure that they are strategically allocated in accordance to the priority of needs. With this regard, the priority is accorded towards the setting up of the company website, human resource and marketing.

Cognitive Views

The cognitive approach to entrepreneurship stemmed from the need to adopt a different perspective from the trait orientation since although the latter seemed to offer significant but yet contradictory results that served to generate disparities between the researched aspects to other personal traits of an individual. The cognition approach mainly employs the cognitive aspects of entrepreneurs to explain their distinctive behaviors that are specifically involved in the perception of opportunities and the establishment of businesses together with the attainment of business growth. Moreover, the term “cognitive style” is mainly employed to embellish various ways of processing information that are characteristic to entrepreneurs. A review of cognitive literature reveals two distinctive lines of research comprising of the cognitive processes and the cognitive structures.  There exists a significant amount of research that focuses on the study of the knowledge structures that are attributable to entrepreneurs, which enable them to make judgments, evaluations and decisions when dealing with opportunities and tine creation and growth of enterprises (Boucknooghe et al., 2005; Busenitz & Barney, 1997; Gaglio & Katz, 2001; Mitchell, Smith, Seawright, & Morse, 2000; Sánchez, 2009).

On the other hand, another section of the literature focus on the concept that the cognitive processes play a primary role in influencing the thought processes, words, and actions of an individual and consequently the means through which the individual acquires, utilizes, and processes information (Baron & Markman, 1999; Krueguer & Evans, 2004; Neisser, 2007). The perspective holds that entrepreneurs think and process information in a different way from that of non-entrepreneurs and the apparent differences further serve to distinguish individuals who create or aim to establish enterprises from those who do not intend to created firms. Therefore, the term, cognitive style, is normally used to characterize the various ways of processing information that are associated with entrepreneurial behavior (Baron, 2004; Boucknooghe et al., 2005; Van den Broeck, Vanderheyden, & Cools, 2003).

As far as the cognitive perspective of entrepreneurship is concerned, the business owner appears to have the cognitive style that is akin to entrepreneurs. The owner is able to identify a need in society, the existence of the relevant resources and consequently comes up with a novel idea on how to satisfy the need and make an economic gain. Moreover, the investor is able to identify the existing risks and sets up the relevant measures on how to best deal with any probably adverse implication that arises from the risks.

Conclusion

In conclusion, the establishment of the FreeMarket Solutions Inc. is in line with the fundamental theories of entrepreneurship. The creation and establishment of the business entity is based on the ability of the owner to identify a market opportunity, come up with viable business model, and then mobilize the necessarily resources with the aim of making an economic gain.

 

 

 

 

 

 

Bibliography

Baron, R.A. (2004). The cognitive perspective: A valuable tool for analysing entrepreneurship’s basic «Why» Questions’. Journal of Business Venturing, 19(2), 221-239.

Baron, R.A., & Markman, G.D. (1999). Cognitive mechanisms: Potential differences between entrepreneurs  and  non-entrepreneurs.  In  P.D.  Reynolds,  W.D.  Bygrave,  et  al.  (Eds.), Frontiers  of  entrepreneurship research.Wellesley, MA: Babson College.

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Busenitz, L.W., & Barney, J.B. (1997). Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision making. Journal of Business Venturing, 12(1), 9-30.

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Cuervo, A. (2010). Entrepreneurship. Berlin: Springer.

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Nambisan, S. (2016). Digital Entrepreneurship: Toward a Digital Technology Perspective of Entrepreneurship. Entrepreneurship Theory and Practice, 41(6), pp.1029-1055.

Neisser, U. (2007). Cognitive psychology. Englewood Cliffs, NJ: Prentice-Hall.

Praszkier, R. and Nowak, A. (2012). Social entrepreneurship. Cambridge: Cambridge

Sánchez, J.C. (2010a). University training for entrepreneurial competencies: Its impact on intention of venture creation. International Entrepreneurship and Management Journal, April, 1-16.

Shane, S. (2007). A general theory of entrepreneurship. Cheltenham [u.a.]: Elgar.

Van den Broeck, H., Vanderheyden, K., & Cools, E. (2003). The field of cognitive styles: From a theoretical review to the construction of the cognitive style inventory. Vlerick Leuven Gent Management School Working Paper Series 2003-26. Vlerick Leuven Gent Management School.

Sánchez, J.C. (2010a). University training for entrepreneurial competencies: Its impact on intention of venture creation. International Entrepreneurship and Management Journal, April, 1-16.

Van den Broeck, H., Vanderheyden, K., & Cools, E. (2003). The field of cognitive styles: From a theoretical review to the construction of the cognitive style inventory. Vlerick Leuven Gent Management School Working Paper Series 2003-26. Vlerick Leuven Gent Management School.

 

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