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Introduction to Entrepreneurship

Pages:12

Introduction

Developing an entrepreneurial mindset is related to the capability of the mind. It describes a way of thinking that helps individuals accept challenges and be decisive. Overcoming issues and accepting responsibilities is the basic need for improvement. It allows people to learn from mistakes and improve skills (Baron, R.A. and Hmieleski, K.M., 2018). Entrepreneurship is an important factor in modern, economic, and social life. The entrepreneur and owner-manager both are running a short term small business. The business manager can find some role model to make decisions whereas the entrepreneur is a person who is managing a new business without having any approach (Carbery, R., 2015). Thus the nature of business must be profitable and easily sustainable for the customers.

Entrepreneurship as a concept. It grasps the promise of growth and helpful factor in earning profit and enjoyable for long term success. New ventures conducted some mistakes at the start but after some seeking steps, it may give a lot of profit in the form of popularity.

Rules and decisions also have their own values. If the rules are strong to implementation that will give a reward in the form of profit as a return. Training and educational facilities are rare for new entrepreneurs. There is no source that provides the entrepreneur with practice and skills to move on business. Lack of market experience is also a hurdle behind establishing entrepreneurship (Peters, M., 2005).An entrepreneurial mindset can develop, if individuals willingly work and strive for excellence. Working on business startup and identification of path towards entrepreneurial mindset is oriented on three building blocks. These are identification of the opportunity, creation of value and capturing that value. The identification of the opportunity needs solution of problem.

Undervalue creation; need is evaluated to examine the issue. The entrepreneurial skills can be developed when there are some external ways to showcase skills (Blundel, R., Lockett, N. and Wang, C.L., 2018). This critical assignment is significant to understand individual characteristics related to entrepreneurial mindset. The paper will identify social forces that help contribute entrepreneurial success and failure. Current research related to entrepreneurship will be discussed in this paper, in addition some approaches to entrepreneurship will also be elaborated.

Entrepreneurial Traits

Entrepreneurs work to enhance economic development and create opportunities. A successful entrepreneur expands its thinking and vision to implement unique ideas. Implementing innovation is central for entrepreneurs because they accept challenges. To me, an entrepreneur is not only a creative person but capable to communicate effectively because it is a highly motivated element to open new horizons of success. My entrepreneurial traits are strong working ethics, creativity, and passion and open mindedness.

These traits are linked to more traits and skills that enable me work hard and get discipline in my life. I believe some other traits like creativity, self-confidence, preserving, leadership, team spirit, adaptability, self-motivation, agree to take risk, and ability to format a network also exist in my personality. Social forces are directly implemented in an entrepreneur’s business because an individual is a person who analyzes the social problems critically and makes some creative, sustainable and innovative ideas to solve this problem through his vision. Individual characteristics and social forces associated with an entrepreneur’s business.

Everything has two aspects: success and failure. A person canonly know the value of success who has faced failure. Here some characters are mentioned that are contributing to the success and failure of the entrepreneur business.

Features behinds success of Entrepreneur

Some characters behind the successful entrepreneur business are discussed as:

Seriously step forward, the best entrepreneur takes every step of his business very carefully because he knows he is responsible for every kind of deed in the form of profit and loss.

Satisfactory dealing with customers: A customer is a person to whom the business existed. Numerous implementations are adopted to satisfy the customers and to get many consumers to maximize the profit.

Cautious in decision making: Every decision directly affected the business reputation, thus the entrepreneur must be watchful in making the decisions.

 Harness of technology: The best entrepreneur should have awareness about the use of technology. It will help to increase the production and quality of goods would be appreciative.

Personal involvement: Personal attention and investment of personal thoughts bring the business to the top. Because you may not make others better unless you make yourself better in front of others.

Not afraid of risks: The entrepreneur can make business better only when he is willing to face any kind of risk.

Causes of Failure

Some reasons behind the failure of entrepreneur can be:

 Employee excuses: Employee excuses are extremely involved in business failure because if they are not responsible for their duties the compensation has to the businessman in the form of loss or business failure has to face.

 Pause due to business failure condition: If the business-facing continuous loss and the owner take a pause not taking steps for the improvement. This situation also may cause the entrepreneur to fail (Blundel, R., Lockett, N. and Wang, C.L., 2018).

Outside forces involving in business: When a business-facing unusual condition like an uncertain economy, political issues, or the price fluctuation in the market may cause business failure.

Dishonest staff: Dishonest staff is a major reason for the business failing because they do not have a fair feeling for the business.

Unable to handle confrontation: If the owner fails to solve employee issues and confrontations, this reason also affects the business badly.

GET2 Test Score

My critical evaluation is incomplete without including test score. Overall GET2 test score of first attempt is 74% that means I am occasionally enterprising. As an entrepreneur, I am able to work on limited projects and this situation reveals that working as intrapreneur is possible in leisure time by doing voluntary work. I have amedium score in achievement that means I have orientation for future, effective management of time, I rely on my abilities, and I am determined to ensure my objectives through realistic goals. This medium score meansI am good at balancing my life and work.

Gibbs reflective cycle allows understanding of description, feeling, evaluation, analysis, and conclusion and action plan. The description of experience, feeling about it and evaluation that this experience is good or badenhance learning and planning. Whatever is learned, is presented in conclusion. My action plan on the basis of this test will elaborate how much strengths I possessand how could I deal with such situation in my life.

The values of result show that I am capable to build up business knowledge and skills and I can further learn from business, technology platforms.A medium score on achievement means need for achievement is high that can exhibit different qualities such as being optimistic, managing time effectively, result orientation approach, and willingness to do work in long term. My determination to do business is based on high energy levels and persistence is a pursuit in my aims. I can adequately take responsibilities with strong drive. Thesequalities will help me be careful about maintaining work life balance and take care of relationships in my life.

I have medium score in autonomy and creativity, that means I am independent, determined and individualistand can be a valuable member for my organizational team. If I start a business, it would be easy to work with employees. My radical disruptive innovative ideas can be game changer for me. My creativity allow me brainstorming and mind-mapping that allow iterative process of thinking. I have attained highscore for risk taking and medium score for locus of control.High score on risk taking can be helpful for me to seize opportunities and be analytical. Locus of control can be effective for me to be self-confident, proactive and display enterprising skills. This will develop necessary business skills for enterprise. My management of control is based on opportunism, self-confidenceand taking control over my destiny. Opportunism is a key advantage that allow me think positive and navigate problems to get success in all ways of life. Internally strong feeling allow hard work and exert controlover life. I tend to express strong will that is linked to self-belief because it is a point where results are equated with the efforts done. My creative skills develop innovative approach for my thinking.

GET2 test score for attempt two is 80% which shows a high achievement towards enterprising. Remaining scores of creativity, risk taking, determination and locus of control are same as first attempt.

Evaluation of Leadership Potential

Evaluating own leadership potential is linked to the quality of perception and thinking capabilities. My leadership potential as an entrepreneur is positive associated with skills. The perception and attitude to work allows open mindedness and planning.  Capital and finance is the backbone of every kind of business unless you cannot come in true your own business. After the process of investment, you may further step forward in entrepreneurship. The owner of the entrepreneurship must be decision making and adopt visionary methods. The owner of the business ready to respond every time against the market disorder, in case of partnership and at the time of loss.An entrepreneur must know how long his business will exist? How much does he gain profit? Which product will be introduced? How much workforce is required to complete the task? These factors must a businessman have in mind to establish a prolonged business.  Entrepreneurship focused on such business plans which were not introduced before, this loneliness is also issued around entrepreneurship. There is no role model available to follow. The businessman has to make his own strategies to run the business.

The leadership potential can be evaluated while working in an organization and measuring the outcomes. I believe that leadership activities in business can develop positive results if there is motivation for employees. The strategic plan for growth is the major task for leaders and it helps entrepreneurs to take corrective actions. For example, in my view, my leadership potential is linked to opportunities, when I get a streamlined direction, I can effectively respond to customer needs.

Being an entrepreneur, I believe opening up new markets for existing products is the best way to respond to the customer needs. I work for the motivation of employees so that market development procedures can be improved. This process is also beneficial for the modernization of distribution channels. With the implementation of new methods, better skills and management of expertise is possible. This process is also helpful in securing the old finance sources and introduce better and new methods. With this mechanism, flow of work can be organized, and any insecurity in financial system can be eliminated.

I believe on my leadership potential because it can be clearly seen from decision making power. If my implemented system for employee’s recruitment and hiring works better and gives productive results, I would be assured that my leadership potential as an entrepreneur is adequate (Zahra, S.A., 2015). Communication strategies and information within organization is strongly recommended because it serve quality. In the organizational culture, an entrepreneur is responsible to bring innovation and conceptualize channels of communication. In addition, employment, development and empowerment of employees is useful indicator to see if the employees are satisfied. Therefore, leadership tasks are extensive and include reward and appraisal system for employees. It is also a major issue involving entrepreneurship. The honest and liable team makes the business to its superior ways, thus team binding and designations according to abilities also matter to the business growth directly.

Entrepreneurship is an example of fire that looks attractive but when anyone goes it’s nearer it burns the hand who wants to catch it. Entrepreneurship is the same thing only such a person uses this strategy that can bear the loss, face failure, take risks, and have decision making power. These passionate persons are called entrepreneurs and adopt different approaches for entrepreneurship.The personalities and traits approach is to judge the personalities because different personalities conducted different approaches. Researchers believe that there is a correlation between personality type and a successful entrepreneur.

Sociological approaches drive with the social and cultural factors which are directly involved in the growth of the business. It also provides a guideline on how social and cultural structure reacts to business development.

Although, everybody knows that the entrepreneur person is not common. He is a creative-minded, multi-talented, decision-maker, and has a visionary and intellectual spirit. Far away from the fear of loss or failure. He must be competent in any kind of situation and can develop motivational power to achieve the goal. This approach shows a strong and motivational approach of the entrepreneur toward his business (Burns, P., 2016).

The process approach is focused on running the entrepreneurship; personalities do not matter in this approach. The academic institutions follow this approach during the teaching session of entrepreneurship. This approach is also taught as different courses like business management courses.Babson College is the top leading institute for entrepreneur education which introduces the new approach for entrepreneurship. The method approach emphasizes on learning and practicing. This kind of approach calculates the skills and relevant techniques.

Dr. Heidi Neck who is a well-known entrepreneur’s educational expert from Babson College offers key steps to practice to develop entrepreneurship. The practice of play is conducted to open the student’s mind for new and innovative ideas. For example mind mapping, and brainstorming. Empathy practice is conducted to understand the feelings of customers, to meet their expectations.The creation practice pushes the students towards new creations, to improve production and to meet the needs of the followers (Osterwalder, A. and Pigneur, Y., 2010).Experimentation practice leaves the students freely, to gather personal experience and experiments to make some innovative ideas to develop the business in a new shape.: The practice of reflection helps the students to take a back step on action practices and find out new directions for entrepreneurship.

To be successful as an entrepreneur, it is necessary to have a mental attitude that can provide a positive outlook. With this mindset, any company can influence the corporate culture. In such an operating framework, there is no room for negative thoughts because they undermine company’s progress and forward development. It is management to motivate employees and lead them in a positive development (Daniel Xh, R., 2019). For all the entrepreneurs, the necessary skills are linked to positivity of attitude because a positive attitude influences all the employees so it enhances efficiency and productivity. A productive environment is associated with high business profits as well as better retention rates for staff.

 

References

Baron, R.A. and Hmieleski, K.M., 2018. Essentials of entrepreneurship: changing the world, one idea at a time. Cheltenham (UK): Edward Elgar.

Blundel, R., Lockett, N. and Wang, C.L., 2018. Exploring entrepreneurship. Los Angeles: Sage.

Burns, P., 2016. Entrepreneurship and small business: start-up, growth and maturity. New York: Palgrave Macmillan.

Carbery, R., 2015. Managing the HRD Function. Human Resource Development, pp.47–62.

Daniel Xh, R., 2019. The Complete Management and Leadership Resource Guide (CMLRG). Management and Leadership Skills that Affect Small Business Survival, pp.105–162.

Osterwalder, A. and Pigneur, Y., 2010. Business model generation: a handbook for visionaries, game changers, and challengers. Hoboken, NJ: Wiley.

Peters, M., 2005. Entrepreneurial skills in leadership and human resource management evaluated by apprentices in small tourism businesses. Education Training, 47(8/9), pp.575–591.

Zahra, S.A., 2015. Corporate entrepreneurship as knowledge creation and conversion: the role of entrepreneurial hubs. Small Business Economics, 44(4), pp.727–735.

Edinburgh, U., 1970. Gibbs’ reflective cycle. [online] The University of Edinburgh. Available at: <https://www.ed.ac.uk/reflection/reflectors-toolkit/reflecting-on-experience/gibbs-reflective-cycle> [Accessed 28 Apr. 2020].

Grugulis, I., 2007. Management and leadership development. Skills, Training and Human Resource Development, pp.133–155.

Hoch, J.E. and Dulebohn, J.H., 2013. Shared leadership in enterprise resource planning and human resource management system implementation. Human Resource Management Review, 23(1), pp.114–125.

Hoch, J.E. and Dulebohn, J.H., 2017. Team personality composition, emergent leadership and shared leadership in virtual teams: A theoretical framework. Human Resource Management Review, 27(4), pp.678–693.

Anon, 2020. Human Resource Development, Diversity, Skills And Training. Case Studies in Work, Employment and Human Resource Management, pp.111–111.

Malebana, M.J., 2014. Entrepreneurial Intentions and Entrepreneurial Motivation of South African Rural University Students. Journal of Economics and Behavioral Studies, 6(9), pp.709–726.

Millikin, J.P., Hom, P.W. and Manz, C.C., 2010. Self-management competencies in self-managing teams: Their impact on multi-team system productivity. The Leadership Quarterly, 21(5), pp.687–702.

Shepherd, D.A. and Patzelt, H., 2018. Motivation and Entrepreneurial Cognition. Entrepreneurial Cognition, pp.51–103.

Shirokova, G., Laskovaia, A. and Beliaeva, T., 2017. Entrepreneurial learning and entrepreneurial intentions: a cross-cultural study of university students. European J. of International Management, 11(5), p.606.

Strubler, D.C. and Redekop, B.W., 2010. Entrepreneurial human resource leadership: A conversation with Dwight Carlson. Human Resource Management, 49(4), pp.793–804.

Turhan, N.S., 2020. Analysis on Entrepreneurial Intentions and Motivation and Learning Strategies of University Students. International Journal of Educational Research Review, pp.159–164.

Ziek, P. and Smulowitz, S., 2014. The impact of emergent virtual leadership competencies on team effectiveness. Leadership & Organization Development Journal, 35(2), pp.106–120.

 

Facial Door Lock

Pages:10

1.    Summary/Purpose

Samsung is a Korean company and one of the world’s largest manufacturers of electronic equipment. It was established in 1938. Samsung’s goal is to use its talents and technologies to create the latest and improved products and services, and to contribute to global development. With the development of the smart home industry, smart door locks are alsobecoming common. However, as an emerging industry, smart door locks have some shortcomings that need to be improved, such asthreat of system hacking and information theft. Samsung’s new generation of facial recognition smart door locks will effectively solve these problems and provide a more flexible and convenient unlocking solution.

The potential targeted customer base of this industry is the working class that works long shifts and have been working for quite some time. To understand the profile of the said product better it is vital to know the features of the smart lock. Samsung’s door lock offers three features simultaneously. They are facial recognition feature, a pressure sensor, and a quick alarm system. This mechanism of triple checks can maximize the safety of the family. In addition, the said product also has very reasonable pricingso that mostof the working classcan afford it.In order to promote the products, online advertising options will be availed,whereas the products will also be displayed at flagship stores for experiencing first hand. The advantages that this next generation of smart door lock has to offer can make it earn a considerable place in the relative market.

 

 

 

2.    The Function of the Company

The Samsung Group is the largest multinational enterprise in South Korea. The Samsung Group includes many international affiliated companies with businesses in electronics, finance, machinery, insurance, chemistry, artificial intelligence, and many other fields. Regarding smart door locks, Samsung’s current products are SHD, SHP, SHS, DP, and P series. The price range is between 596CAD and 1380CAD. The unlocking methods include fingerprint, key, password, swipe card, mobile phone, and APP. The system can be supported through IOS as well as android, and is powered by batteries. Keeping this setup in mind, an attempt will be made by our company to innovate the smart door locks system even more than that of Samsung.The name of our product is Facial Recognition Door Lock, which will be commonly known as FDL1. The launching of our product has the potential to revolutionize the smart door locks industry. The utmost priority of our company and the major goal of our product is to ensure the personal as well as economic safety of our customers. In addition to that, our company has also been looking into ways by employing which our customers on long distances from their homes can be completely assured of the safety of their properties.This feature will help us attract the working class, particularly the workers in the flying industry who are almost always away from their homes. Secondly, our company has also taken into proper consideration the purchasing power of the targeted customer base,and we can state with full confidence that the said customer base amply possess the resources to spend on this necessity, and it will not be a burden for them.

As far as the functioning of the pressure-sensing and one-button alarm feature in our product is concerned, it will allow the customers to be aware of any sort of intrusion. This feature will operate through sensing excessive pressure, and the owner of the property will be notified of this either through an alarm system or through a mobile application. Many other previous shortcomings have also been solved through this smart system.

Moreover, not only have we paid attention only to the quality of our product, its advertising and marketing have been our primary focus as well. We have also allocated massive resources to after-sale services i.e., maintenance services for our valued customers. For the advertising purpose, to promote our product,its ads will be given on all popular social networking sites, such as Instagram, Facebook, Twitter, etc. In addition, we will provide customers with an opportunity to experience samples before buying, and with the option to adjust the products according to customers custom recommendations and requirements. When the product is released, we will provide customers with an unconditional 15-day return and three-year warranty option. Therefore, not only will we provide our customers with high-quality products but complete services regarding the product will also be present. Hence, we have enough competitive edge to occupy a considerable place in the market.

 

3.    Research Plan & Potential Competitors

It is a well-known fact that many households have already set up smart door locks to make their lives more convenient and safe. However, many of our competitors only provide a touch screen panel to enter code and or biometric options, but if the electricity ever fails or its mechanism jams, the lock needs to be destroyed to get in or out. On the other hand, our Samsung smart door locks allow entrance not only through entering a password and biometric scanner, but it also provides key way to deal with some emergencies. One can also access the house by using Bluetooth. This technology makes door locks safer because residents can track the history of access. So, this idea offers more ways to enter by using smart door locks. Besides, our product will be easier to use for all age groups particularly, for senior citizens. They will have options to choose from. We are also aware that many competitive products have set up build-in alarm technology to protect households against robberies. To overcome this highly competitive feature, we have coupled a type of pinhole camera in the base of that technology, which means people can completely know what is going on outside the door. This method can make the household safer and record evidence in certain situations. Besides, many products in the market have also connected the smart door locks with Wi-Fi technology besides providing the master control panel controlled through Wi-Fifor major household appliances and lighting systems. It can determine the need for turning on/OFF household appliances based on the presence of human beings (Park et al., 2009). We have to admit that this type of function helps achieve home automation. However, in the past decade, we have proved that firewalls, IDSs, IPSs, and air-gap isolation can’t provide complete protection, as attackers can evade all types of separation and infect an organization’s network by using malware (Guri&Bykhovsky, 2019). If the smart home locks are connected with other devices closely, hackers have more opportunities to attack electronic devices and get one’s private information. Furthermore, through this technique, they can also breach the smart door locks and put one’s house into a dangerous situation. Using SDS technology can perfectly solve this problem because any access would need Bluetooth,which uses a double encryption system to prevent privacy leakage.

Moreover, our product has two more very important features. Fist of them is automatic locking. We will add a motion sensor and voice sensor in the rooms. If there is no motion and voice in a certain period of time, the door will be locked automatically, which can prevent the situation that someone forgetful goes through or accidentally forgetting to lock the door. This is a recheck system that can make the house mare safe. We also recognize the weakness of the smart door lock, which is high power consumption. So, we prepare to solve this problem by using a more durable battery and a low volume warning. It can remind one of recharging in case of lock doesn’t work, and residents can’t get in.

 

4.    Objectives Key Issues

Samsung’s smart home is already widely known. Nowadays, many people use smart things. SmartThings has become an important line of Samsung products. The line includes many products that have made people’s life more convenient. According to a survey, the value of digital door locks increased to USD 2.13 billion in 2017. Researchers have estimated that the growth rate of smart door locks will be 27.2% from 2018 to 2026. On the downside, due to the popularity of smart door locks and the loopholes associated with them, the rate of burglary rose to 66%. The security problems of smart door locks are becoming more and more dangerous (Goodin, 2016).

The first key issue in this field is a software security issue. Each smart door lock allows everyone to download an application that can control any digital door lock, so people can use this software to check the situation of the home or the digital door lock. In addition to it, there are some other vulnerabilities; for example, one can steal or even guess the PIN code to open the smart lock. PIN code is the important information for the digital door lock. There are also some other applications that can affect the work of this application, such as disabling the holiday mode or setting off a false fire alarm. These malicious applications which appear in the SmartThings application store use bugs to enable thieves to permanently and secretly access customers houses.

The second key issue is about OAuth. Researchers have found that some people use the defective parts of SmartThings to cause OAuth. OAuth refers to allowing users to allow third-party applications to access private resources stored by the user on a website, such as photos, videos, and passwords. The researchers found that these people would use this flaw to open smart door locks. First, they will send a link to the users who have the smart door lock, asking the victim to click this link. This link apparently takes the victim to the actual SmartThings HTTPS website, and there seems nothing wrong while logging in (Greenberg, 2016). Finally, when the victim logs in, a message is sent to the thief, and he can utilize the victims login information about the door lock application to steal the PIN code.

5.      Way Forward

Based on these critical issues, the researchers have concluded that the new generation of smart door locks needs to strengthen the security management of the application. The researchers have recommended installing a facial recognition system on the door lock, which is also an essential feature of our product. First of all, it can eliminate the danger of stealing the pin code. Because it is not easy to copy someone’s facial features. For example, recently, in biometric door locks, many thieves use tape to steal the victim’s fingerprints and access the victim’s home to steal. Secondly, this feature also strengthens the safety factor of the door. First of all, the new generation of smart door locks can be installed with gravity sensors on the door locks. When someone maliciously destroys the door lock, an alarm sound can be issued to alert the users. Thirdly, the identification application is also installed on this system. This system can help users identify visitors separately. For example, when a user’s friend visits more than 5 times, the application software will ask the user to choose whether to record this person as a familiar person. At the same time, when a stranger stays at the user’s door for more than 10 minutes, the application software of the door lock will automatically send a message to the user to alert the user to pay attention to safety. This can significantly enhance the safety factor. The fourth is to prevent other malicious programs from stealing important user information. For the new generation of smart door lock applications, researchers suggest adding a security layer and strong anti-virus software to protect the users’ privacy and information, such as PIN codes. The security layer can prevent users from clickingOAuth, which can protect the users’ important data(Lodderstedt, 2018). Also, a strong anti-virus option will stop the application from scanning unnecessarily hence defending against malware. At the same time, researchers can configure it to meet the specific needs of users on any device and the entire network. It provides real-time protection (Rubenking, 2018). These ways solutions can curb the limitations that came with the previous smart door locks.

 

 

6.    Promotion Plan

The purpose of our advertising is to let people know that our products have excellent quality. We will put our advertisements on our own website and some apps which are really popular, such as Instagram and Facebook. These apps will give more people know-how and information about our company and our products. At the beginning of the career, in order to attract customers to buy our products, we will give them more rights. They can return within ten days even without any reason, and they will have three years warranty. If they want to try it first, they will also be able to try our products in our company. It will be exactly the same door that we will sell to our customers. They can buy it if they are satisfied with the product. In addition, when we will launch the newer products, our customers will have a great opportunity to trade in the old one and get the new one at a discounted price. For our marketing plan, first, we choose to establish and operate our company in London, Ontario. Because all the natives live in this city, and they know this city very well. If the locals of this area seem interested in our products and find them useful, we will continue to expand our company to other provinces and countries. What we really want to achieve is that customers can get through our smart doors to have a safer life. Secondly, we will encourage our customers to try our products. We will find some local distributors and offer each of them 3 to 5 products to let them have a try at our products. In addition, we will have a company membership. The membership will be divided into different levels. When one buys more products, onewill be ata higher level in the membership and will have more privilege. Thirdly, when the customers who have already purchased the door introduce our products to more people, they will have a 10% discount.

7.    Conclusion

Overall, there are many different types of smart door locks in the market because of the booming industry. Samsung’s original smart door locks have some major security issues, which cannot guarantee users’ safety and privacy.However, the facial recognition door locks are designed to ensure the safety of families and property and improve the flaws in the original digital door locks. For the Facial door lock, there are some new features, such as the alarm system, and options to prevent the invasion of malware. Our main agenda is not profiteering, but the citizens’ safety. Our company offers the customers a lot of rights, such as that they can try the product first, can return within ten days without any reason and can have three years warranty as well. We will read the customers’ feedback carefully and give the customers safer environments to live in.

 

 

8.    References

  1. Greenberg, A. (2016, May 2). Flaws in Samsung’s ‘Smart’ Home Let Hackers Unlock
  2. Doors and Set Off Fire Alarms. Retrieved from https://www.wired.com/2016/05/flaws-samsungs-smart-home-let-hackers-unlock-doors-set-off-fire-alarms/
  3. Goodin, D. (2016, May 2). Samsung Smart Home flaws let hackers make keys to
  4. Front door. Retrieved from https://arstechnica.com/information-technology/2016/05/samsung-smart-home-flaws-lets-hackers-make-keys-to-front-door/
  5. Guri, M., &Bykhovsky, M. (2019, May). aIR-Jumper: Covert air-gap
  6. Exfiltration/infiltration via security cameras & infrared (IR). 82.
  7. https://sciencedirect.com/science/article/pii/S0167404818307193
  8. Lodderstedt, T. (2018, November 9). Why you should stop using the OAuth implicit
  9. grant!. Retrieved from https://medium.com/oauth-2/why-you-should-stop-using-the-oauth-implicit-grant-2436ced1c926
  10. Park, Y., Sthapit, P., Pyun, J. (20l9). Smart digital door lock for the home automation.
  11. https://ieeexplore.ieee.org/abstract/document/5396038
  12. Rubenking, N. J. (2018, November 26). 7 Signs You Have Malware and How to Get
  13. Rid of It. Retrieved from https://www.pcmag.com/how-to/7-signs-you-have-malware-and-how-to-get-rid-of-it

 

Corporate entrepreneurship is both an oxymoron and a necessity?

Pages:6

Introduction

            One of the many distinct traits and qualities of an entrepreneur is the tendency to think out of the box and find solutions to effectively resolve the problem at hand that might not have been possible to achieve while working in accordance with the defined set of procedures and practices. The entrepreneur’s non-compatibility with standardized rules and regulations appears to be the fundamental reason behind the belief that entrepreneurs are not capable or suited for working within an organizational or corporate setting. However, the concept of corporate entrepreneurship provides a unique perspective to the subject of entrepreneurship.

The essay looks at the academic research and discussion surrounding the domain of corporate entrepreneurship. It studies the various models and frameworks that are associated with corporate entrepreneurship and tries to evaluate whether corporate entrepreneurship should be considered an oxymoron, or if the concept has enough advantages and benefits for an organization that it can be regarded as a necessity for the attainment of the organization’s strategic goals and objectives.

 

Corporate Entrepreneurship

            The entrepreneurial individuals working in an organizational setting are typically termed as ‘Corporate Entrepreneurs.’ Donald and Goldsby (2004)describe corporate entrepreneurs as “those managers or employees of the company who do not follow the status quo of their co-workers” (Donald and Goldsby, 2004). They also highlight an important trait of such employees by suggesting that the corporate entrepreneurs are often regarded as the ‘visionaries’ within the organization and are critical to the progress and growth of the company in the long run. However, the corporate entrepreneurs, in their bid to take the company to the next step, are often prone to disregard the established processes and procedures set in place by the organizational leadership. (Chau and Siu, 2000)

Despite their disregard for defined structures and working processes, the corporate entrepreneurs account for being extremely resourceful and creative employees of the organization. Sharma and Chrisman (2007)argue that the corporate entrepreneurs are the best suited employees in order to deal with challenging issues and problems in an effective and efficient manner. While, they have indicated towards many unique qualities and traits of corporate entrepreneurs, (Donald and Goldsby, 2004) have also argued that the practices and activities of corporate entrepreneurs can hamper the organizational progress as well. The corporate entrepreneurs tend to work “with a fine line between unique resourcefulness and outright rule breaking which can easily cause substantial damage to the company” (Donald and Goldsby, 2004).

 

Why is Corporate Entrepreneurship a Necessity?

            There are many benefits and advantages that the managerial leadership of a company can utilize by instilling and encouraging entrepreneurial capabilities and practices within its organizational workforce. One of the most fundamental advantages of establishing an organizational culture that promotes the values of corporate entrepreneurship is productivity. When employees are allowed to generate and pursue new and innovative ideas and solutions to business challenges, it not only has beneficial results for the growth of the organization, but such entrepreneurial freedom can also open new opportunities for the employees and propel them to greater career heights(Tseng and Tseng, 2019). Similarly, some of the other major advantages associated with the practice of corporate entrepreneur are the efficiency in pursuit of new ventures and projects, the effective implementation of change processes, and the retention of the organization’s most productive employees. (Dess et al., 1999)

 

Essential Models and Frameworks

Some of the primary models and frameworks that highlight the necessity of corporate entrepreneurship are presented below.

 

  • Stealth Innovation

Stealth innovation is one of the fundamental concepts that aid corporate entrepreneurship is the concept of stealth innovation. Miller and Wedell-Wedellsborg (2013)argue that stealth innovation is one of the most effective ways of promoting the culture of corporate entrepreneurship within the organization. It allows the employees to seek and pursue their innovative ideas and strategies that can be extremely beneficial for the company. Stealth innovation enables the employees to work undercover on their planned project or innovative idea first and then engage the managerial leadership of the company in order to get their approval. In order to prevent the project from being shot down, stealth innovation enables the corporate entrepreneur to work on his idea in silent and gather enough working evidence to support his plan so that it cannot be turned down when presented to the higher management.

An example of stealth innovation is of Jordan Cohen of Pfizer. Cohen successfully implemented his project pfizerWorks which allowed the employees to outsource their daily tasks to focus increasingly on important business activities. This, in turn, led the company to benefit from higher productivity levels. Cohen applied stealth innovation and worked on his idea under the radar and gathered allies and evidence for its support. He then successfully got the management’s approval for his project as he was able to back his idea with substantial data and evidence of its effectiveness.(Forbes, 2013)

However, there are certain demerits and disadvantages associated with the utilization of stealth innovation as well. One of the major drawbacks is that the corporate entrepreneur tends to lose focus on his regular roles and responsibilities and works excessively on his project under the radar. It can lead to adverse effects on the company’s operations and overall productivity. Similarly, the corporate entrepreneur can lose sight of the business goals and take more and more risks to get his project successful. The case of Jérôme Kerviel is evidentof this as he allegedly madeillegal trades costing Société Générale more than $7.2 billion(Iskyan, 2016). Such risks can, however, be avoided by establishing a culture of clear communication, regular feedback, and by ensuring that the project falls in line with the organization’s business objectives.

 

  • Greiner Framework

The Greiner framework is a strategic business tool that provides an effective understanding regarding the age, growth, and progress of an organization.The framework involves five stages of development or phases of growth during an organization’s life cycle, namely the creative phase, the direction phase, the delegation phase, the coordination phase, and the collaboration phase. Each of such phases is marked with its unique set of challenges and problems that have to tackled effectively for the company to ensure its growth and progress in the long run(Greiner, 1998). The practices and procedures of corporate entrepreneurship can be applied effectively during such phases of organizational growth in order to address the potential challenges in an efficient manner. Hence, corporate entrepreneurship becomes a necessity for organizational success and prosperity.

For instance, the primary challenge during the direction phase as per the Greiner framework is the issue of decentralization and autonomy. This stage is characterized by employees demanding for autonomy and workplace independence while the managers are unwilling to lose control of business decision making processes. The practices of corporate entrepreneurship can be implemented here in order to provide an appropriate degree of freedom and delegation to the employees who have been identified by the management to be most suited for such responsibility. It will also allow the managers to keep the activities of the employees in check by ensuring effective communication and consultation. An example of this practice can be the workplace delegation model in place at Google which allows creative freedom and decentralization to its employees.

 

  • Organizational Ambidexterity

O’Reilly III and Tushman (2013) define organizational ambidexterity as the “ability of anorganization to both explore and exploit—to compete in mature technologies and markets where efficiency, control, and incremental improvement are prized and to also compete in new technologies and markets where flexibility, autonomy, and experimentation are needed.” The utilization of corporate entrepreneurship practices is essential to the dynamics of exploration and exploitation within the organization. The corporate entrepreneurs are central to exploring new business opportunities and exploiting viable project leads which can be highly beneficial for the business. Hence, corporate entrepreneurship becomes a necessity for the company when viewed in regard to the concept of organizational ambidexterity. An example of organizational ambidexterity is Apple which effectively engages in both exploration and exploitation activities by inventing new devices as well as making efficient modifications and improvements to existing products. (Mootee, 2012)

 

The Challenge of Corporate Entrepreneurship

While corporate entrepreneurship holds many unprecedented benefits and advantages for the company, it is, nevertheless, a risky proposition that comes with its own set of issues and challenges(Garvin and Levesque, 2006).Donald and Goldsby (2004) have proposed three primary applications in order to tackle the problems posed by corporate entrepreneurship. Firstly, the organization mustcultivate the required flexibility, freedom, innovation, and risk appetite within its culture. Secondly, the managerial leadership must actively seek and identify the possible barriers that might become a hindrance for employees in order to practice the values of corporate entrepreneurship.

Similarly, the management also has to align the individual objectives and goals of the entrepreneurial employees with the organizational vision and strategic targets(Dess et al., 2003). Ultimately, the development of an ethical framework holds substantial importance for the organization to train and guide the corporate entrepreneurs so that they are able to utilize the available resources and capabilities in the most effective and productive manner. (Donald and Goldsby, 2004)

 

Conclusion

            It can be essentially concluded from the above discussion that corporate entrepreneurship is not only an oxymoron, but it is also a necessity. Research has shown that the values and principles of corporate entrepreneurship hold substantial benefits and advantages for any organization and can guide it towards progress and prosperity in the long run. The concepts of stealth innovation and organizational ambidexterity, along with the Greiner framework, provide significant evidence to the necessity of corporate entrepreneurship for an organization.

 

References

Chau, L.L., Siu, W., 2000. Ethical Decision Making in Corporate Entrepreneurial Organizations. J. Bus. Ethics 23, 365–375. https://doi.org/10.1023/A:1006144910907

Dess, G.G., Ireland, R.D., Zahra, S.A., Floyd, S.W., Janney, J.J., Lane, P.J., 2003. Emerging issues in corporate entrepreneurship. J. Manag. 29, 351–378.

Dess, G.G., Lumpkin, G.T., Mcgee, J.E., 1999. Linking Corporate Entrepreneurship to Strategy, Structure, and Process: Suggested Research Directions. Entrep. Theory Pract. 23, 85–102. https://doi.org/10.1177/104225879902300306

Donald, K.F., Goldsby, M.G., 2004. Corporate Entrepreneurs or Rogue Middle Managers? A Framework for Ethical Corporate Entrepreneurship. J. Bus. Ethics 55, 13–30. https://doi.org/10.1007/s10551-004-1775-3

Forbes, 2013. Stealthstorming: How to Navigate the Politics of Innovation. Forbes.

Garvin, D.A., Levesque, L.C., 2006. Meeting the Challenge of Corporate Entrepreneurship. Harv. Bus. Rev.

Greiner, L.E., 1998. Evolution and revolution as organizations grow. Harv. Bus. Rev. 76, 55–64.

Iskyan, K., 2016. Here’s the story of how a guy making $66,000 a year lost $7.2 billion for one of Europe’s biggest banks. Bus. Insid.

Miller, P., Wedell-Wedellsborg, T., 2013. The Case for Stealth Innovation. Harv. Bus. Rev. 91, 90–97.

Mootee, I., 2012. Organizational ambidexterity •. Ivey Bus. J.

O’Reilly III, C.A., Tushman, M.L., 2013. Organizational ambidexterity: Past, present, and future. Acad. Manag. Perspect. 27, 324–338.

Sharma, P., Chrisman, S.J.J., 2007. Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship, in: Entrepreneurship. Springer, pp. 83–103.

Tseng, C., Tseng, C.-C., 2019. Corporate entrepreneurship as a strategic approach for internal innovation performance. Asia Pac. J. Innov. Entrep. 13, 108–120. https://doi.org/10.1108/APJIE-08-2018-0047

 

Innovative management approach towards improvement of employees’ performance at work

HR Strategy of Baskin Robbins International

Lehman Brothers Scandal

 

GLOBALISATION AND EMERGING MARKETS

Pages:13

Abstract

 

Manufacturing industries contribute to the Gross Domestic Product of an economy, so it has to keep up with the latest trends and key emerging societal factors that are aligned with the cultural factors. The construction and manufacturing industry is helpful for a much-skilled labour force because it integrates high-value parts, design, research and development, and marketing. In Hungary, there are several global chains of multiple industries that are further comprised of millions of medium, small, and large manufacturers that are facing intense demand from consumers, and manufacturing innovating products. Today, global economies are ignited by macro-environmental trends. The report discusses a comprehensive scenario of the economy of Hungary as an emerging market. Key conditions in the local business environment, socio-economic and political factors and key entry strategies to enter in a new market are a part of this report. The research report elaborates the involvement of business in the economic growth of a country and key role played by industries to involve people under economies of scale.

Introduction

 

Hungary is a part of central Europe that has transitioned from a planned economy to a market-based economy (Lane, 1995). Emerging technology is changing the direction of business and overall industry and further involving new strengths, capabilities, merchandisers, and professionals (Bae, S. Y., 2018). Aerospace, agriculture, and healthcare sectors are now specializing in better development aspects and have gained a strong position worldwide. This research report is going to discuss Hungary as an emerging market, in future it will be changing the economic patterns. The report will examine Hungary economy as an emerging market, and it will analyze the local, cultural, legal, and political factors that are shaping this overall economy.  In addition the following will also be discussed  key market entering strategies, the overall performance of the economy, trends, risks and challenges, entry and long term strategies to minimize risk as well as recommendations to businesses looking to enter this market.

The Local Business Environment

 

Under global strategy, Hungary’s economy has gained significant importance due to the marketing mix and segmenting the local market. It has been seen that this economy is an attractive destination for international business now, and it is going to be in the future. Business and service industries are considered a powerful segment of the economy that cannot only change the future of the labor market but also create more opportunities for business (Eszes, L., & Muhlemann, A. 1993).With the rapid expansion in transport, trade patterns, and communications, the international market has provided easy access to all businesses(Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018).

To fulfill consumer requirements, world is getting harmony in all its processes, such as technology, lifestyle, transportation, capital, and travel. Resurgence in global standardization at international level provides many motives to global firm’s decisions about trade. International marketers focus on right standard balance in global businesses so that performance can be optimized (Chan, E., 2019). Integration level is viewed at a global level due to global marketing strategy and role of marketing tactics. Technological advances have a significant role in the economy.

Global expansion caused the industry to push its product launch regarding automation, knowledge-based products, and biotechnology (Eszes, L., & Muhlemann, A. 1993). Economy can better explain the consumption perspectives of an industry when it comes to its specific features and products (Chaudhry, H. and Hodge, G., 2016). Value, when produced in commodities, undertake cultural and political-economic approaches to fulfill the historical trends. Marxist economists focused on linear commodity trends to discuss the concept of production and consumption. Individual production network tends to acquire vertical structure systems for the provision of consumer goods.

Approach of economy regarding the interaction of horizontal factors undertakes all political, socio-economical, and cultural factors, about consumables that move from one country to another. In Hungary, the automotive industry is advanced, and leading edge technology is implemented in biotechnology sector (Lane, S. 1995). A regulatory environment for the development of pharmaceutical products and biotech products is implemented. Through low cost and quick method of manufacturing, consumers engage in the ever-changing collection of affordable commodities; for instance, capital sources are involved in corporate development and spin-off activity. The rapid changes in trends and evolving lifestyle perspectives have shaped the industrial products (Cox, H. and Mowatt, S., 2012). On a broader culture, tremendous stress is placed on the system of production that can be labor-intensive. Hungary has a broader scope regarding fashion and footwear due to potentiality of factors; for instance, high-end fashion, products for the younger generation, and luxury brands are an important part of Hungary’s economy (Eszes, L., & Muhlemann, A. 1993).

Hungary’s economy focuses on broader business initiatives; for instance, construction industry is facing local regulation and strong price competition. The economic position of Hungary is based on GDP, and it’s per capita income is two-third of the average of EU-28, while in 2018, its GDP was $155.7 billion (Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018).Current markets are performing good and high competition is see in main global brands, their high quality of products, and performance is causing difficulty for new firms to enter(Lane, 1995).Opening of a fashion company in a new place is based on certain factors, some of which are difficult. In Hungary, supply of raw material and transportation is advanced level and moving towards sustainability and therefore making the competition intense (Eike, R. J., 2018). Hungary economy is performing a competitive role in the education and ICT segment of the industry. Socioeconomic and demographic factors and trends are likely to shape its future potential as an emerging market (Lengyel, B. and Cadil, V., 2009). For global trade supplier finance, capital is made available to the suppliers, who are engaged at the global level, to practice better policies. To open a business in Hungary, its cultural and social factors are important to consider; for example, if fashion textile industry decides to open its brand in Hungary, it will have to focus on its market, economy, and social aspects (Jarmuzek, M., Orlowski, L.T. and Radziwill, A., 2004). Consumer values, socio-cultural patterns, ethnicity, and perceptions of consumers are some key factors that will change the future market and its potential (Gardetti and Muthu, S., 2020).

PESTLE analysis

 

Industrial development is competitive in terms of the provision of quality and sustainability of products in Hungary. Segmentation, targeting, and promotion policies of different companies are conducive to increase sales and consumer spending (Lengyel, B. and Cadil, V., 2009). PESTLE analysis deals with all political, economic, technical, social, legal, and economic factors at a place. For instance, if Apple is planning to open in Hungary, it has to consider all the factors in the IT industry in Hungary regarding segmentation.New entrants in Hungary will face intense competition because stable socio-economicsystem.Political system is stable, yet some after-effects are due to the international worsening of global issues that will cause new incumbents to focus on their cost structure. Before 2019, Hungary’s fashion market has faced good performance, and its recorded revenue reached $75 billion, according to the National Fashion Chamber Hungary (Jacobs, and E., 2016).

Healthcare in Hungary is facing some global uncertainties, yet it is providing opportunities to British companies such as investment projects, management consultancies, supply of medical equipment, and hospital management services (szikinger, 1999). Economic situation in Hungary is much better due to the presence of many luxuries, lifestyles, and consumer goods in the Lombardy region (Kim, E.-D., 2000). A multi-party democracy of Hungary is divided into conservative right and opposition.

Legal system in Hungary is strict and composed of many regulations and rules. Fundamental law in Hungry is considered a parliamentary republic. For sustainability in the environment, the rule of law is established. Many implementations are faced with business networking (Mcgrath, P., 2013). The commercial communication system is established to know about products’ sustainability. Legal factors are persistent in following the rules and product’s life cycle as well as to reduce any impact on the environment. Specific manufacturing elements have to undertake to license regarding product’s packaging or supply chain and transportation (Lee, J. K., 2018). Legal system also provides confidence about state laws, product features, and fashion-based networking. Property laws and intellectual property elements prevail in the economy that is helpful for whole industry brands.

Economic factors such as inflation, employment level, and per capita income in Hungary are stable for businesses to make companies more productive, and industry can gain its sustainability. Social atmosphere and socio-cultural aspects undertake values and norms, societal characteristics, customs, ethics, and other peculiarities that work significantly for fashion as an emerging market. These factors are important to consider when a business company tries to launch a new product or bring innovation in existing products. For instance, in 2018, US merchandise exports to Hungary were $1.75 billion, and the main exporting items were automotive components, IT equipment, vehicles, electric machinery, electronics, and other manufacturing supplies. It is also working on the economies of scale rule to target consumer’s standards and fulfill their expectations (Mitterfellner, O., 2019).

The socio-cultural factors in Hungary are traditions, values, and norms that people love to see in their favorite brands. In Hungary, despite sustainable implementation, an adequate legal framework about environmental rules is implemented. Activities of involvement with rules & regulations customers will be fruitful to enter into the market. Difference in attitude and culture is a key factor that multiple brands have to focus on while entering in an emerging segment of society. Sustainability of products in Hungary is maintained under specific guidelines of commercial communication to make sure that traders are focusing on green claims (Mcgrath, P., 2013).  In Hungary, rapid industrialization has raised environmental concerns; therefore, product sustainability needs environmental protection policies.

Entry Strategy and General Business Strategy

 

Main driver of growth in Hungary is domestic demand; it was estimated in 2019 when rise in wages and high consumer confidence was observed. In same year, the foreign investment acted as a strong performing vehicle, and the electronic sector captured interest of global investors (Lengyel, B. and Cadil, V., 2009). Long term strategiesthat new business could adapt to mitigate risksarising from challengesare to be more competitive and revolutionized due to digital market ideas.In Hungary, there is a high wage rate, high profit margins and increased tax collection that can be an attractive entry point for new firms, so they can enhance a general balance of the economy. Due to business and industry growth, Hungary’s economy faced public debt going down, and International Monetary Fund anticipates that in 2020 this debt will be 65.1% and further will reduce to 62.9% in 2021 (Szent-Iványi, B., Végh, Z., & Lightfoot, S. 2018). There is a need for fiscal consolidation for the economy because its supply-side reforms need to maintain growth momentum so that global resilience can be built.

The economy of Hungary undertakes entry and long-term strategies that could mitigate risks arising from the challenges. The entry mode in international business segments adopts various policies such as product export, involvement in joint ventures, participation in the franchise sector, and making operational alliances or subsidiaries (Szent-Iványi, Végh & Lightfoot, 2018). IT, automotive, and construction sectors in Hungary can become more competitive by adopting growth features to get short and long terms success. Due to high competition at a global level, Hungary’s economy will focus on a continuum by nagging in low control to high control practice with resource commitment. Low control model needs more limited commitment of resources, so investment risk is reduced. However, in economy, some firms have little power in global operations that can result in declined financial outcomes (Sadachar and Manchiraju, 2016).

In this case, competitive business brands can enter in Hungary market by focusing on key cultural practices, norms, and involvement of values in the society. Foreign market expansion by any brand also has to focus on the skills and managerial expertise while entering into a new market (Mcgrath, P., 2013). Retail environment in the industry has to establish a competitive brand under specific format, assortment, and product offering. Retailer needs a specific kind of entry mode that matches with the global expertise and its international experience (Lane, 1995). This aspect is closely related to tackling foreign market challenges. The industry undertakes key cultural and market-related factors as competition because these factors are integral to understand economic and political stability. The company has to focus on supply chain management and distribution practices (Szent-Iványi, Végh & Lightfoot, 2018).

In Hungary, the government does not restrict foreign investment. Foreign direct investment is not limited and convenient to organize a large scale for specialized firms (Lengyel, B. and Cadil, V., 2009). Hungary’s industry is specialized in terms of multinational investment to cater to consumer demand. foreign firms win market share from incumbents by adopting different strategies like price wars, raising specific barriers, and making intense competition (Sweney, M., 2019). Competitive advantage in Hungary is considered complex due to the degree of internationalization. According to specialization of segments, the market diversifies and modify different areas of products to shift the market trends. Economy of Hungary is lucrative for global business firms because they can reap the benefits by acquiring a larger market share (Lengyel, B. and Cadil, V., 2009). New businesses can enter by analyzing their competitors’ profiles as well as researching the potential of the Hungary market (Eszes & Muhlemann, 1993). The pricing, product value, and advantages are important to consider. Consumer market has been focused on existing brands, division categorization, and product diversification is necessary to enter in the market because these aspects are inherently related to the economy.

Conclusions and recommendations

 

Economy of Hungary is set up on a competitive framework that incorporates the latest trends, expertise, and skilled labor force into the product portfolio. Countries engage cultural and social factors in their products because it is helpful for targeting better customers. Country-specific socio-economic & business factors must be considered by new businesses to gain a competitive advantage in Hungary’s market. Working in a foreign country requires a firm to consider its specific economic, political, legal, and environmental policies. New businesses have to focus on specific norms and values operating in Hungary regarding competition in industry because already present firms are operating in tough competition.

Some fashion and business brands have to undertake country risk uncertainty to survive in atmosphere and to ensure the profitability of the firm. In a foreign market, uncertainties like economic health, inflation, disposable income, and political stability and unemployment rates have a considerable impact on the company’s performance.

Key recommendations for new business, who want to enter in this market are research and development, flexibility, and a focus on high control models. They should be avoided to limit resource commitment. To be successful in the global market of Hungary, companies should select low control, entry models, because there will be a high country risk. New businesses have to consider government restrictions. It is recommended to maintain control in emerging market by complying with local rules.

Many competitive business attempt to start operations in Hungary, so they have to focus on political, economic, legal, and environmental factors in the Hungary market. IT, automotive, and fashion being sophisticated industries have to work on a diverse set of occupations. This research has highlighted the significance of certain institutional and cultural factors that play a significant role in the development of an economy and help elevate a firm’s business performance.

 

References

 

Bae, S. Y., 2018. Smart Fashion and Wearable Technology: Opportunities and Challenges for Future Growth. Journal of Textile Science & Fashion Technology, 1 (3).

Bobek, V., Maček, A., and Kros, J., 2019. International franchising in the fashion industry from the franchisor perspective. J. for International Business and Entrepreneurship Development, 12 (1), 49.

Chan, E., 2019. Condé Nast is launching a new sustainability strategy – here’s why [online]. Vogue Australia. Available from: https://www.vogue.com.au/fashion/news/cond-nast-is-launching-a-new-sustainability-strategy-heres-why/news-story/939e6e7a83c8d83b481800e143e3177b [Accessed 19 Mar 2020].

Chaudhry, H. and Hodge, G., 2016. Vendor-managed inventory systems in the apparel industry. Information Systems for the Fashion and Apparel Industry, 221–234.

Cox, H. and Mowatt, S., 2012. Voguein Britain: Authenticity and the creation of competitive advantage in the UK magazine industry. Business History, 54 (1), 67–87.

Eike, R. J., 2018. Review of Fashion, Technology and Health: Future Directions for the Apparel Industry. Trends in Textile Engineering & Fashion Technology, 4 (3).

Gardetti Miguel Ángel and Muthu, S. S., 2020. The UN sustainable development goals for the textile and fashion industry. Singapore: Springer.

Jacobs, B., Simpson, L., Nelson, S., and Karpova, E., 2016. Matching Sourcing Destination with Fashion Brands Business Model: Comparative Advantages of Bangladesh and Vietnam Apparel Industries. Fashion, Industry and Education, 14 (2), 11–23.

Kim, E.-D., 2000. A Study on the Global FDI Flow and Choice of Commercial Policies. International Business Review, 4 (1), 1.

Lee, J. K., 2018. Adoption of the “See Now Buy Now” Business Model in the Fashion Industry. Bloomsbury Fashion Business Cases.

Mitterfellner, O., 2019. Fashion marketing from a historical perspective. Fashion Marketing and Communication, 1–16.

Sadachar, A., Feng, F., Karpova, E. E., and Manchiraju, S., 2016. Predicting environmentally responsible apparel consumption behavior of future apparel industry professionals: The role of environmental apparel knowledge, environmentalism and materialism. Journal of Global Fashion Marketing, 7 (2), 76–88.

Sweney, M., 2019. Vogue publisher Condé Nast reports annual loss of £14m [online]. The Guardian. Available from: https://www.theguardian.com/media/2019/jan/03/vogue-publisher-conde-nast-annual-loss [Accessed 19 Mar 2020].

Eszes, L., & Muhlemann, A. (1993). MANUFACTURING MANAGEMENT IN HUNGARY: A PERSPECTIVE. European Business Review, 93(5). doi: 10.1108/eum0000000001923

Lane, S. (1995). Business starts during the transition in Hungary. Journal Of Business Venturing, 10(3), 181-194. doi: 10.1016/0883-9026(94)00038-v

Szent-Iványi, B., Végh, Z., & Lightfoot, S. (2018). Branding for business? Hungary and the sustainable development goals. Journal Of International Relations And Development, 23(1), 190-209. doi: 10.1057/s41268-017-0127-8

Jarmuzek, M., Orlowski, L.T. and Radziwill, A., 2004. Monetary Policy Transparency in Inflation Targeting Countries: The Czech Republic, Hungary and Poland. SSRN Electronic Journal.

Legvold, R. and Tucker, J.A., 2006. Regional Economic Voting: Russia, Poland, Hungary, Slovakia, and the Czech Republic, 1990-1999. Foreign Affairs, 85(5), p.173.

Lengyel, B. and Cadil, V., 2009. Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary. Transition Studies Review, 16(1), pp.174–188.

Mcgrath, P., 2013. Impact of Financial Deregulation on Monetary and Economic Policy in the Czech Republic, Hungary and Poland: 1990-2003. SSRN Electronic Journal.

Szikinger, I., 1999. A Letter from Hungary: Law Enforcement in Hungary During Transition to Democracy. Crime Prevention and Community Safety, 1(1), pp.71–77.

 

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RECOMMENDATIONS AND STRATEGIES FOR CAMCO

 

COST OF CAPITAL – VOSSLOH

Pages:8

COST OF CAPITAL - VOSSLOH

 

 

  1. How can the business activity of the company be best described? Is the market risk implied by these business activities expected to be above or below average?

Business Activity:

Vossloh is a global firm which operates in around 20 countries and primarily deals with products and services pertaining to railway infrastructure. The products of Vossloh include track fastening systems, concrete ties, switch systems and the innovative services associated with the life cycle of rail tracks. With over 30 production sites, Vossloh segregates itself into four basic divisions.

  • Core Components: This division of Vossloh manufactures standard and common products for railway infrastructures on an industrial level. The products of this division include railway fasting, screw-fastened and maintenance-free elastic systems which are applicable and required for all kind of railway tracks ballasted and slab tracks, mainline and conventional lines, high-speed lines, heavy haul and local transport.
  • Customized Modules: This division manufactures products which are customized to different clientele needs. Products of this division includes turnouts and crossings, manganese frogs, switch blade, switch actuators and locking devices, signaling products and rail monitoring systems; such products are unique and different for every other project.
  • Lifecycle Management: This divisions incorporates providing railway track services in order to increase the life of the tracks and keep them well maintained. Services of this division includes welding and transportation of long rails, the corrective milling and the preventative care of tracks and switches and reconditioning and recycling of old rails.

 

 

Market risk of “Vossloh”:

Market risk is the uncertainty which arises from external factors and which impact the whole financial system as a whole, also known as “Systematic Risk”. Market risk includes events and incidents like recessions, political turmoil, changes in interest rates, natural disasters and terrorist attacks etc.

Vossloh’s market exposure and risk are above average as compared to firms operating in other sectors for the following reasons:

  • Companies operating in infrastructure industry highly depends on the performance of governments of countries where they operate. Government only invests in infrastructure projects when they have budget surplus or enough room from lending so to invest in projects like railways which are not considered as important as providing the basic necessities like food, education, and health. So a recession, regional or global, can really hamper the business and financial performance of Vossloh.
  • The other external factor which can impact negatively the financials of Vossloh is increment in the interest rate. Operating in construction and infrastructure industry, sometimes require accumulating huge debts, which can result in higher finance cost. Vossloh’s net interest expense increased from £12.5 million in 2017 to £13.4 million in 2018 which tells that Vossloh has a significant amount of debt in its balance sheet and any hike in interest rate can shrink the net profit. However, this risk can be mitigated as Vossloh enjoys a fine reputation in the industry which can result in negotiated, better and fixed markup rate.
  • As Vossloh operates in 20 different countries and has supplied its products to more than 65 countries, fluctuations in foreign exchange rates can also impact the final profits if not hedged properly.

Above mentioned aspects show that the market exposure of Vossloh is slightly higher than the average but as with higher risks come higher profits, Vossloh has been mitigating such risks pretty well since its inception and we expect the same to continue. (Vossloh , 2018)

  1. What is the cost of debt of the company? Describe the critical issues you are facingand propose a well-founded solution.

Cost of Debt of Vossloh:

Total Outstanding Debt:

Net Interest Paid:

Source: Vossloh Annual Report 2018

The cost of debt of Vossloh should be (14.9/267.9 = 0.055), 5.5%.

Issues in calculating cost of debt:

One issue we faced in calculating the cost of debt of Vossloh is that Vossloh hasn’t provided the breakdown of its “Other interest expense” so we can’t be so sure that this amount only includes interest paid for its debt as companies also tend to pay interest on its outstanding account payables and other trade debts. In order to deal with this issue, we will add a caveat regarding this. However, this issue is not severe as the probable amount of interest paid for trade debts are not usually so high.

So, the cost of debt of Vossloh is 5.5%.

 

  1. What is the cost of equity of the company? Please identify a Beta-factor based onyour own calculations. For that purpose collect the appropriate stock quotes (e.g. onariva.de) and explain your approach. Moreover, discuss the problems in identifyingthe risk-free rate and the market risk premium and explain your solution.

Cost of Equity:

In order to calculate the cost of equity, we will take a step by step approach, which is the following:

Step 1: Calculate the risk free rate:

We are taking the rate of USA Treasury Bill – 10 years as our risk free rate which is currently 2.21%. (Source: US Department of Treasury)

A risk free rate is one which guarantees a certain rate of return and doesn’t have any uncertainty. US Treasury Bill – 10 Year offers the qualities of risk free rate as it is free from all kinds of risks including default risk, liquidity risk, and time horizon risk.

Step 2: Calculate the Beta.
In order to calculate the beta, we need to extract the closing stock price of Vossloh and the closing index value of the stock market where Vossloh trades. The data should at least be of last 4 years as having data of a shorter span may not truly portray the risk of the stock as it might not be enough to take into account all the ups and downs the company has went through.

After collecting the data, we will use the following formula to calculate the beta.

With the above mentioned formula, the beta of Vossloh is calculated as 0.50. We took the data from December 2015 to December 2019.

Step 3: Calculate the market premium.

Market premium is the extra return Xetra has provided over the risk free rate.Xetra’s last 1 year return has been taken as taking a return of longer horizon, i.e. 10 years, may take into account financial crisis period of 2008/09 which may distort the return the market has provided recently. Also, as per industry practices, market premium should reflect the current scenario rather than historical years.

Step 4: Using the equation of CAPM to calculate cost of equity:

CAPM equation is, Cost of equity = risk free rate + (Beta*Market Premium)

CE of Vossloh = 2.21% + (0.50 * 22%) = 13.21%

So, the cost of equity of Vossloh as per the CAPM model is 13.21%.

 

  1. How do you determine the weight of equity and the weight of debt? Again, describethe problems you are facing and propose a solution.

Weightages:

In order to calculate the weight of equity and debt, we first need to determine the total amount of funding Vossloh has acquired in form of both, debt and equity. After calculating the amount, we will calculate the share and weightage of each, debt and equity, in that amount.

Total Funding:

Hence, the total amount of funding for Vossloh is 512.5+267.9 = £780.4 million

Weightage of debt:

= 267.9/780.4 = 0.343

Weightage of Equity:

= 512.5/780.4 = 0.656

  1. What is the WACC of the company? Discuss your result in terms of robustness andreliability.

WACC of Vossloh:

WACC = (13.21% * 0.656) + (5.5% * 0.343 * (1-0.15))

WACC = 10.26%

As per our calculations, the WACC of Vossloh is 10.26%. We believe this is accurate and reliable as we have extracted all the data from relevant sources and used methodologies which are used by professionals. 

Bibliography

Vossloh , 2018. Annual Report , s.l.: s.n.

 

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