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Entrepreneurial Decision Making

Published March 15, 2013 by Mayrbear's Lair

decision-making

Introduction

Decision making is an essential part of entrepreneurship that affects numerous elements in operating a business. It is in an entrepreneur’s best interests to possess the skills to help them reach the best decisions available to insure the soundest opportunity for success. Low (2010) contends entrepreneurs play an important role in the economy with three major components that affect their decision making process: (a) the vision and operation of the venture; (b) the uncertainty and risks they confront; and (c) the innovation process or reallocation of resources (Low, 2010, p. 5). In addition, incorporating the necessary business acumen can: 1) influence political agendas; 2) help avoid violation of legal and regulatory issues that can yield outcomes with extreme consequences; 3) play an important role in cultural perceptions; 4) influence the demographic diversity of an industry; and 5) have a huge impact on the financial resources that affects the operation of a business.

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Demographic Diversity

A proprietor’s decision making process can also effect the demographic diversity of an organization. For example, when Virgin Company’s entrepreneurial giant, Sir Richard Branson (2012) was contemplating whether Virgin branch out to launch a new airline, he was advised to avoid certain competitors due to costs and for fear of going up against industry giants. He realized he was up against goliaths with sizable fleets, experienced staff, and strengths from holding huge portions of market share.  Branson’s intuition however, and personal grievances from traveling, kept focused on competitor complacency. He was passionate about creating a better flying experience and knew others felt the same.  With this energy and tunnel vision, Virgin Atlantic was introduced and made their mark in history (Branson, 2012).

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Legal and Regulatory Issues

Each year the US Supreme Court issues actions that constitute new litigation due to failed businesses because of gaps in legal insight in the decision-making process by leaders (Bardwell, 2009). For example, during my employment at Capitol Records, the organization expanded into the music video production market and created a new division called Picture Music International (PMI). This event constituted the rearrangement of senior executives in key positions who were disbursed in helm positions within the structural organization. The changes occurred quickly in an attempt to create a smooth transition while maintaining operations. As a result, important components were overlooked and errors were made due to communication barriers from the rapid transit.  In the process, a contractual renewal date for an important artist went undetected. The new senior executive did not negotiate the original contract and was therefore not cognizant of the issue. The artist’s legal representatives allowed the contract to expire and the artist signed to a competitive label. Because of the gap in legal insight, the oversight resulted in the forfeiture of a major industry player, and in the eyes of the shareholders, perceived as an embarrassing loss.

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Political Agendas and Cultural Perceptions

Steyaert (2000) purports the role of entrepreneurship in the modern era is far larger than previously considered and is closely involved with economics.  Entrepreneurship is viewed as an economic phenomenon, with innovative power that extends beyond its own economic ambitions and requires the examination of its political and ethical effects (Steyaert, 2000). For example, when a firm is exposed for polluting, activists use this opportunity to pursue political agendas.  In the meantime, scholars explore factors that determine how entrepreneurs help economies grow as a result of psychological approaches to an enterprise (Thornton, Robeiro-Soriano, & Urbano, 2011). Take for example the culture Starbucks created. Prior to its genesis, Americans were used to having coffee in diners or restaurants for under a dollar.  Starbucks vision focused on drinking coffee as a reason to socialize. In doing so they created a culture where consumers are happy to pay premium prices to partake in the Starbucks experience. This culture translates into enormous profits and a worldwide phenomenon that includes a Starbuckian dialect.

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Financial Resources

Financial advisors understand that cash flow is also an important component business owners require to make sound financial decisions to ensure growth and survival. A company with solid liquidity is not only able to meet short term financial obligations, but also has accumulated enough equity to take advantage of alluring business strategies as they expand (Cory, Envick, & Patton, 2011). For example, with each success Capitol Records enjoyed from an extensive catalog that includes the Beatles, Neil Diamond, Tina Turner, David Bowie and Kenny Rogers, UK based parent company, Thorn-EMI continued to incur huge revenues that allowed them to expand into other fields. However, for every successful venture, there are also ventures that fail and become corporate tax write-offs. In this aspect, the decision making process can result in failure and loss of revenue.

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Conclusion

Sir Richard offers the following tips that have helped in his decision making: (a) trust your instincts, (b) focus on your customers, not your critics, (c) always support your team, and (d) know when to say goodbye (Branson, 2012). In conclusion, the most important reason decision making is an essential skill for entrepreneurship, is that a wrong choice can become the game changer that makes or breaks an organization.

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References

Bardwell, S. (2009, January 1). Legal insight decision making for small business and entrepreneurs: A judicious approach. Retrieved February 28, 2013, from Freepatentsonline: http://www.freepatentsonline.com/article/Entrepreneurial-Executive/219010996.html

Branson, R. (2012, February 7). Richard Branson on decision-making for entrepreneurs. Retrieved February 28, 2013, from Entrepreneur.com: http://www.entrepreneur.com/article/222739

Cory, S., Envick, B., & Patton, E. (2011, January 1). Sound financial decision making for entrepreneurs: can the GAAP cash flow statement mislead? Entrepreneurial executive. US: The DreamCatchers Group, LLC. Retrieved February 28, 2013, from http://www.freepatentsonline.com/article/Entrepreneurial-Executive/263157521.html

Low, S. (2010). Defining and measuring entrepreneurship for regional research: A new approach. ProQuest dissertations and theses; 2009; ProQuest entrepreneurship. Urbana, IL, USA: ProQuest LLC. Retrieved February 28, 2013

Steyaert, C. (2000, June 18). Creating worlds: Political agendas of entrepreneurship. Nordic conference on small business research. Aarhus, Denmark: ProQuest, LLC. Retrieved February 28 2013, 2013

Thornton, P., Robeiro-Soriano, D., & Urbano, D. (2011). Socio-cultural factors and entrepreneurial activity: An overview. International small business journal. Barcelona, Spain: Sage. Retrieved February 28, 2013

Sir Richard Branson: An Entrepreneurial Knight

Published March 1, 2013 by Mayrbear's Lair

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Introduction

When one hears the term entrepreneur, an image emerges of an individual who organizes and operates a business that involves certain risks.  One of the most successful examples of entrepreneurs in the modern age is Sir Richard Branson.  This charismatic visionary makes running a business seem effortless and fun.  In addition, he displays a disciplined work ethic that is focus-driven, illustrates an adventurous spirit, and demonstrates a passionate devotion to business that is unwavering.  Although he takes many risks that can fail, Sir Richard Branson is recognized as one of the highest achievers in the world of entrepreneurs.

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Entrepreneurship

Today’s successful entrepreneurs require more than just luck and diligence.  They require an ability to create in a demanding environment of high uncertainty and risk that necessitates flexibility and the capability of learning from failure.  Furthermore, an entrepreneur brings to the arena a host of components that include resources, labor, and other various skills and materials.  The most renowned entrepreneurs, like Sir Richard, Steve Jobs and Bill Gates, are driven by an internal force with an inherent need to make a difference in the world while escaping the confinements of bureaucracy (Ries, 2011).

Entrepreneurship is the process of creating something new of value by devoting time and effort in the venture.  Entrepreneurs pursue their business endeavors with passion and enthusiasm.  This drives the engine that attracts success and monetary rewards.  Four behavioral characteristics identify the entrepreneurial spirit: 1) creating a vision; 2) organizing and steering economic structures and social networks; 3) combining resources in innovative ways; and 4) accelerating with the acceptance of uncertainty, setbacks, and failure (Ries, 2011).

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Sir Richard Branson

Sir Richard Branson is an exemplary illustration of an entrepreneur and an esteemed business leader.  He is also a humanitarian that is proactive in politics.  His innovative and groundbreaking ventures demonstrate a fearless maverick style that supports risk taking.  His many successful achievements include founding the Virgin Group Company with branches that extend into the media; airlines and rail; wine and mobile phone services; and a trustee of several charities including the Virgin Healthcare Foundation and Virgin Unite.  In December of 1999, The Queen of England honored him with a knighthood for his services to entrepreneurship.  Not afraid of adventure or failure, this internationally renowned explorer has been involved in numerous world record breaking attempts, including the first hot-air balloon to cross the Atlantic.  Consistent with his lively ambitious and expansionist attitude, Sir Richard’s latest enterprise is Virgin Galactic, a space tourism company that will take passengers into suborbital space (Entrepreneur, adventurer and businessman Richard Branson challenges financial profesionals to have a ‘planetary point of view’, 2006).

Virgin Galactic

Virgin Galactic

The Branson Philosophy

Sir Richard is also one of the most respected entrepreneurs in the world.  His philosophy, “Oh, screw it, let’s do it” (Branson, 2011, p. 14), drives his ambitious spirit as the locomotive to his success.  He recommends four simple principles that can help us achieve higher levels of success:

  1. Live in the moment – In the world of business, quick decisive actions can have big pay offs.
  2. Have fun – Chances for success is much greater when you do what you love and are joyful doing it.
  3. Give back – Show good stewardship and help others even if it is minimal and do so with gratitude and appreciation.
  4. Never give up – The word defeat is anathema in any endeavor (What I learned about entrepreneurship from Richard Branson, 2011).

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The Branson Centre

Recently Sir Richard opened the Branson Centre, a facility in the Caribbean committed to developing entrepreneurship.  The Centre offers a mentorship program to help budding entrepreneurs with networking and exposure, and assists with the coaching and financing aspects of their needs.  Jamaicans lack technical support, adhere to a complicated tax structure, and are in need of additional capital.  The Centre offers an arena to launch new entrepreneurial businesses to stimulate job creation and provide opportunities for locals to improve their communities and fuel their economy (Branson Centre, 2011).

Seascape-Caribbean

Conclusion

Sir Richard’s humanitarian endeavors and his concerns for environmental impact are inspirational leadership qualities in an entrepreneur.  For example, one company called Seascape Caribbean is focused on the restoration of the coral reefs in the coastal region and another, Leanne Talbot of Island Cycle, is dedicated to recycling waste into usable products.  (Branson Centre, 2011).  Sir Richard’s innovative ideas and contributions help enable economic freedom for the employers of the future and support the creation of new jobs.   In conclusion, as the founder of many successful business ventures that continue to create opportunities with environmental consciousness, Sir Richard Branson remains one of the most commendable visionary entrepreneurs and humanitarians of the modern era.

References

Entrepreneur, adventurer and businessman Richard Branson challenges financial profesionals to have a ‘planetary point of view’. (2006, October 15). Retrieved February 14, 2013, from ProQuest: http://search.proquest.com.proxy-library.ashford.edu/docview/447141732?accountid=32521

Branson Centre. (2011, September 13). Retrieved February 14, 2013, from ProQuest Central: http://search.proquest.com.proxy-library.ashford.edu/docview/888611281?accountid=32521

What I learned about entrepreneurship from Richard Branson. (2011, November 22). Retrieved February 14, 2013, from ProQuest Central: http://search.proquest.com.proxy-library.ashford.edu/docview/1030937503?accountid=32521

Branson, R. (2011). Losing my virginity: How I survived, had fun, and made a fortune doing business my way (Updated ed., p. 14). London, UK: Crown Publishing Group.

Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses. New York, NY: Random House, Inc.