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Steps in Setting up a New Business

Uploaded by funkyman on Dec 13, 2011

What activities should an entrepreneur perform prior to the start up of the enterprises

21st century - a highly dynamic and uncertain business environment, globalization, hyper-competition and new technologies that change existing market into a brand new form – shorter product life cycle, advanced communication model, transparent market information, rivalry between SME and corporation, online marketing channel, etc. These make the entrepreneur could not survive easily without a thoughtful strategic plan, strategic management provide them a systematic and comprehensive means for analyzing the environment, and identifying opportunities that could allow them develop and exploit competitive advantages.

From previous research, we could understand that three group of main factors that affect the survivability of new business: (1) individual characteristics of the founder (2) attributes, structural characteristics and strategies of the new business itself (3) business and economic environment (Josef et al. 1992; Oliver Falck 2007), so we could see that these factors are related to the how you lead the organization, plan and understand the highly dynamic business environment, how you manage your cost and plan for your internal organization structure and human resources management. Down to earth, an entrepreneur should do following activities in order to avoid failure when start their business: to analysis external and internal business environment (SWOT analysis), to analysis competitive rivalry (Porter’s competitive strategy), to hire valuable employee (human resources management), to control cash flow and re-allocate investment capital to achieve cost effective (cost management), to maintain high team-spirit and operational efficiency (organizational structure strategy). These strategies could be applied to enhance the survivability of the new venture.

For analysis external and internal business environment, entrepreneur should adopt SWOT analysis. SWOT analysis summaries the key issues from the business environment and the strategy development. This can be useful as a basis against which it judge future strategic choices. SWOT is divided into 4 approaches - Strengths (S), Weakness (W), Opportunity (O) and Threats (T). For evaluation of internal factor, entrepreneur could think about what is the advantage of her enterprise by comparison of her main competitor into several approaches: cost control, resources availability, organizational structure. For example: Patents, Strong brand names, Good reputation among customers, Cost advantages from proprietary know-how, exclusive access to high grade natural resources, favorable access to distribution networks. For evaluation of weakness that entrepreneur can conclude internal disadvantage so as to implement certain measure to fix the problem or at least use alternative method...

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Uploaded by:   funkyman

Date:   12/13/2011

Category:   Business

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Views:   2479

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