Launching New Ventures Through Technology
The business environment of the early twenty-first century affords entrepreneurs the opportunity to launch new ventures through technology. The need to use up-to-date technological innovations in business is increasingly becoming a necessity, as firms strive to obtain good business partners and to achieve competitive advantage. New firms must avoid adopting technology for technology's sake: sound business practices must prevail, and any technology that is adopted must be the right fit.
Keywords E-business; E-commerce; E-marketing; Entrepreneurship; New Venture; Startup; Technology
Entrepreneurship: Launching New Ventures Through Technology
The field of entrepreneurship comprises three main elements: organizational creation, organizational renewal, and innovation — within or outside an existing organization (Sharma and Chrisman, 1999). The formation of new business ventures amounts to organizational creation with innovation, as an individual or organization pioneers, innovates, and takes risks for growth and development.
According to Sharma and Chrisman (1999), “entrepreneurs are individuals or groups of individuals, acting independently or as part of a corporate system, who create new organizations, or instigate renewal or innovation within an existing organization” (p. 18). Entrepreneurs carry out new business permutations out of a quest for growth through innovation.
A business venture is an entrepreneurial activity in which capital is exposed to the risk of loss weighed against the possible reward of profit. New ventures may be formed within preexisting organizations, or they may be formed independently, 'from scratch.' The formation of new business ventures by preexisting organizations is known as corporate venturing. Specifically, corporate venturing refers to the corporate entrepreneurial efforts that lead to the creation of totally new business organizations within preexisting corporate organizations (Sharma and Chrisman, 1999). This is different from strategic renewal, where corporate entrepreneurial efforts result in significant changes to an organization's preexisting business or corporate level strategy or structure, but not the formation of new business organizations.
New businesses formed from scratch are termed startups. Startup activity is related to the macroeconomic growth rate, the cost of capital, and the unemployment rate of a country as well as industry-specific characteristics, especially the technological conditions underlying the industry.
While starting a company is much easier than before, succeeding is as difficult as ever. “Only about a third of all startups ever turn a profit; another third operate at break-even level, and the rest end in failure. Top among the reasons young companies fail are problems such as incorrect market focus and misguided executive leadership” (Copeland and Malik, 2006, par. 3).
In developed economies like that of the U.S., new firms play two essential roles. First, they are engines of innovation, more so than large firms, which only innovate within limits. Secondly, new firms in such economies help to smooth out the oscillations in the business cycle, fuelling rebounds during slump periods.
High-impact entrepreneurs are those who start new firms, often with new ideas, not necessarily ideas for new products, but sometimes with ideas for new business strategies, and innovative production and marketing ideas. Apart from ideas, new firms also need money, skilled people, and other resources: in developed economies, these are often obtained from large, mature firms.
High-impact entrepreneurship thrives most in countries that pay proper attention to the entrepreneurial system, which comprises four sectors: high-impact entrepreneurs, large mature firms, the government, and the universities(Copeland and Malik, 2006). Large mature firms assist new ventures by becoming their customers, outsourcing to them, buying them up, and training and providing human capital to start or join them. The government formulates and implements policies to actively encourage entrepreneurship. It therefore creates an enabling environment for entrepreneurship, provides funding, sponsors research, and buys products from new firms. The universities invest in education: they help broaden access to higher education and carry out research and idea-generation for new businesses.
Technology is the systematic knowledge and use, usually of industrial processes but applicable to any recurrent activity. It refers to developed applications for business and industry and the use of applied science for the development of technical applications. There are two types of developments in technology: those that reduce manual labor and those that enhance existing services (de Bunen, 2003).
There are several branches of technology: applied science (including computer technology, electronics, and nanotechnology); athletics and recreation; information and communication; industry; military science; domestic/residential; engineering; health and safety; and transport.
The use of technology in business has grown dramatically due to increases in the speed of communication and business processes, decreases in the cost of technology, decreases in the importance of businesses activities that take place in fixed geographical locations, globalization, and increases in global competition, major investments in infrastructure, and a leading-edge mentality in firms.
The use of technology in business has even given rise to a new management science called Business Technology Management (BTM). BTM unifies business and technology decision-making at every level in an organization. BTM provides a set of guiding principles, known as BTM Capabilities. The capabilities are combined to form BTM solutions, which organize and improve a company’s practices.
As a global society, we have evolved from the industrial age to the information age; information has replaced physical products and inventories as the real driving force of business success. According to Amine and Botterton (2002), “clearly, there has been a profound transition in methods of doing business, especially in the way market players (both individuals and companies) communicate” (p. 1). Copeland writes, “New technologies are creating new business opportunities on the Internet, on mobile phones, in consumer products, and in information services” (2006, Par. 2).
As with the other branches of technology, the use of information technology (IT) in new businesses has many advantages. Internet and Web-related technologies offer real savings in time, money, effort, and valuable gains in efficiency and scope for many organizations, through the following capabilities (Amine and Botterton, 2002):
- Global information dissemination
- Interactive communication
- Mass customization
- Transactional support
- integration (Looney and Chatterjee, 2002).
Companies “exploit one or more of these capabilities to reach a wider customer base, offer a broader range of value-added service offerings, and develop closer affiliations with customers” (Looney and Chatterjee, 2002, p. 76). Firms now have a relatively economical medium for marketing their products and services to a wider customer base and over long distances. They also offer a broader range of value-added service offerings. Through Customer Relationship Management, firms can also adapt their customer offerings and communications strategy to different customers, cultivate two-way customer-firm dialogue, and drastically improve the firm's image through demonstrated responsiveness (Looney and Chatterjee, 2002).
Geographic Information Systems (GIS) are computer systems designed to collect, store, retrieve, manipulate, and display spatial data. These systems can be used by new firms to geographically reference useful information such as census data, mailing addresses, telephone numbers, demographic traits, population distributions, location of shopping malls and residential housing, and much more.
New markets can be identified on the basis of demographics such as age, income, gender, housing preference, and census block. Advertising expenditure can be allocated to population areas containing appropriate demographic characteristics for the target market, and outdoor advertising can be purchased based on the routes residents are likely to take from work to home. Maps can be prepared to assure efficient routing for delivery of goods and services. Salespeople can access information on customer locations as well as availability of alternative sources (McBane, 2003). GIS can be combined with Global Positioning Satellite (GPS) technology, providing roadside assistance, driving directions, and mobile yellow pages.
According to Diana (2005),
“the technological capabilities offered by computers, software and the Internet have become indispensable in the performing of most business processes, and the reach of this technology is becoming almost unlimited as handheld computing devices and wireless networking technologies improve. . . Increasingly, cars are being designed with computer networking capabilities so that company vehicles can be virtual rolling offices” p. 22). Advances in technology like e-mail, video conferences, and online conferencing save time by reducing the number of face-to-face meetings needed to make decisions, conclude transactions, and manage projects.
Along with the Internet, “the concept of the intranet and extranet have developed which have added to the single communication standard. The intranet means that a company uses the Internet technology for communication within the company. The extranet further extends the intranet by allowing outside companies to gain access to selected internal company data” (Kanter, 1999, p. 13).
New firms can also use technology for their internal operations. For instance, Internet and Web-related technologies can be used to recruit employees and to give employees direct access to their own HR and payroll information, thereby allowing them to perform by electronic means transactions that used to be performed by administrative staff on paper forms. Touch-tone telephones can also be used for employee self-service, through Interactive Voice Response (IVR) systems (Nielson, 2002).
E-business (technologies or uses) refers to the use of information and communications technologies to perform any type of business-related operation. E-business refers to
“the ability of a firm to electronically connect, in multiple ways, many organizations, both internal and external, for many different purposes. It allows a firm to execute electronic transactions with any individual entity along the value...
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