Enterperneurship and Notes Free Essays

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Entrepreneurship—MGT602 VU Table of Contents Lesson No. Title / Topic 1 Introduction 2 The Nature and Importance of Entrepreneurship 3 Entrepreneurial Process/ Start up 4 The Entrepreneurial and Intrapreneurial Mind 5 The Entrepreneurial and Intrapreneurial Mind (Contd†¦ ) 6 The Entrepreneurial and Intrapreneurial Mind (Contd†¦ ) 7 The Entrepreneurial and Intrapreneurial Mind (Contd†¦ ) 8 The Individual Entrepreneur 9 The Individual Entrepreneur (Contd†¦ ) 10 The Individual Entrepreneur (Contd†¦ 11 International Entrepreneurial Opportunities 12 International Entrepreneurial Opportunities 13 International Entrepreneurial Opportunities (Contd†¦ ) 14 International Entrepreneurial Opportunities (Contd†¦ ) 15 International Entrepreneurial Opportunities (Contd†¦ ) 16 Creativity and Business Idea 17 Creativity and the Business Idea 18 Legal Issues for the Entrepreneur 19 Legal Issues for Entrepreneur (Contd†¦ ) 20 Legal Issues for the Entr epreneur (Contd†¦ ) 21 Creating and Starting the Venture 22 Creating and Starting the Business Venture (Contd†¦ 23 Creating and Starting the Venture (Continued) 24 Creating and Starting the Business Plan Continued) 25 The Marketing Plan 26 The Marketing Mix 27 The Organizational Plan 28 The Organizational Plan (Continued) 29 The Organization Plan (Contd†¦ ) 30 The Financial Plan 31 The Financial Plan (Continued†¦ ) 32 Pro Forma Sources and Uses of Funds 33 Pro forma Sources and Uses of Funds 34 Bank Lending Decision 35 Sources of Capital 36 Sources of Capital (Contd†¦ ) 37 Capital Sources in Pakistan Preparing for the New Venture Launch: Early Management Decisions 38 (Contd†¦ ) Page No. 3 06 08 13 15 18 20 22 24 26 29 33 35 37 39 40 43 46 49 52 54 56 58 60 62 65 68 70 72 75 77 81 83 85 87 89 91 95  © Copyright Virtual University of Pakistan 1 Entrepreneurship—MGT602 VU 39 Preparing for the New Venture Launch: Early Management Decisions (Contdâ € ¦ ) 40 Preparing for the New Venture Launch: Early Management Decisions (Contd†¦ ) 41 Preparing for the New Venture Launch: Early Management Decisions (Contd†¦ ) 96 97 99 42 Preparing for the New Venture Launch: Early Management Decisions (Contd†¦ ) 43 New Venture Expansion Strategies and Issues 44 New Venture Expansion Strategies and Issues (Contd†¦ 45 Entrepreneurship and Pakistan 102 103 105 108  © Copyright Virtual University of Pakistan 2 Entrepreneurship—MGT602 INTRODUCTION Lesson 01 LEARNING OBJECTIVES 1. We will write a custom essay sample on Enterperneurship and Notes or any similar topic only for you Order Now 2. 3. 4. 5. VU 1. To introduce the concept of entrepreneurship and its historical development. 2. To explain the entrepreneurial decision process. 3. To identify the basic types of start-up ventures. 4. To explain the role of entrepreneurship in economic development. 5. To discuss the ethics and racial responsibility of entrepreneurs. NATURE AND DEVELOPMENT OF ENTREPRENEURSHIP The term entrepreneur comes from the French and translates â€Å"between-taker† or go-between. † Earliest Period In this period the money person (forerunner of the capitalist) entered into a contract with the go-between to sell his goods. While the capitalist was a passive risk bearer, the merchant bore all the physical and emotional risks. Middle Ages In this age the term entrepreneur was used to describe both an actor and a person who managed large production projects. In such large production projects, this person did not take any risks, managing the project with the resources provided. A typic al entrepreneur was the cleric who managed architectural projects. 7th Century In the 17th century the entrepreneur was a person who entered into a contract with the government to perform a service Richard Cantillon, a noted economist of the 1700s, developed theories of the entrepreneur and is regarded as the founder of the term. He viewed the entrepreneur as a risk taker who â€Å"buy[s] at certain price and sell[s] at an uncertain price, therefore operating at a risk. † 18th Century In the 18th century the person with capital was differentiated from the one who needed capital. In other words, entrepreneur was distinguished from the capital provider. Many of the inventions developed during this time as was the case with the inventions of Eli Whitney and Thomas Edison were unable to finance invention themselves. Both were capital users (entrepreneurs), not capital providers (venture capitalists. ) Whitney used expropriated crown property. Edison raised capital from private sources. A venture capitalist is a professional money manager who makes risk investments from a pool of equity capital to obtain a high rate of return on investments. 19th and 20th Centuries In the late 19th and early 20th centuries, entrepreneurs were viewed mostly from an economic perspective. The entrepreneur â€Å"contributes his own initiative, skill and ingenuity in planning, organizing and administering the enterprise, assuming the chance of loss and gain. † Andrew Carnegie is one of the best examples of this definition, building the American steel industry on of the wonders of industrial world, primarily through his competitiveness rather than creativity. In the middle of the 20th century, the notion of an entrepreneur as an innovator was established.  © Copyright Virtual University of Pakistan 3 Entrepreneurship—MGT602 Innovation, the act of introducing something new, is one of the most difficult tasks for the entrepreneur. VU Edward Harriman and John Pierpont Morgan are examples of this type of entrepreneur. Edward reorganized the Ontario and southern railroad through the northern pacific trust and john developed his large banking house by reorganizing and financing the nation’s industries. This ability to innovate is an instinct that distinguishes human beings from other creatures and can be observed throughout history. DEFINITION OF ENTREPRENEUR The concept of entrepreneurship from a personal perspective has been explored in this century. This exploration is reflected in the following three definitions of an entrepreneur: In almost all definitions of entrepreneurship, there is agreement that we are talking about a kind of behavior that includes: 1. Initiative taking 2. The organizing and reorganizing or social/economic mechanisms to turn resources and situations to practical account. 3. The acceptance of risk or failure. To an economist, an entrepreneur is one who brings resources, labor, materials, and other assets into combinations that make their value greater than before, and one who introduces changes, innovations, and a new order. To a psychologist, such a person is typically driven by certain forces- the need to obtain something, to experiment, to accomplish or perhaps to escape the authority of others. Entrepreneurship is the dynamic process of creating incremental wealth. Our definition of entrepreneurship involves four aspects: 1. You read "Enterperneurship and Notes" in category "Papers" Entrepreneurship involves the creation process. 2. It requires the devotion of the necessary time and effort. 3. It involves assuming the necessary risks. 4. The rewards of being an entrepreneur are independence, personal satisfaction, and monetary reward. For the person who actually starts his or her own business there is a high failure rate due to poor sales, intense competition, lack of capital or lack of managerial ability. THE ENTR EPRENEURIAL DECISION PROCESS (Deciding to become an entrepreneur by leaving present activity ) Many individuals have difficulty bringing their ideas to the market and creating new venture entrepreneurship and the actual entrepreneurial decisions have resulted in several million new businesses being started throughout the world. Although no one knows the exact number in the United States. Indeed, millions of ventures are formed despite recession, inflation, high interest rates, and lack of infrastructure, economic uncertainty and the high probability of failure The entrepreneurial decision process entails a movement from something to something— a movement from a present life style to forming a new enterprise. To leave a present live-style to create something new comes from a negative force–disruption. Many companies are formed by people who have retired, moved, or been fired. Another cause of disruption  © Copyright Virtual University of Pakistan 4 Entrepreneurship—MGT602 is completing an educational degree. The decision to start a new company occurs when an individual perceives that forming a new enterprise is both desirable and possible. VU KEY TERMS Breakthrough innovations A new product with some technological change Business ethics The study of behavior and morals in a business situation Desirability of new venture formation Aspects of a situation that make it desirable to start a new company. Entrepreneur Individual who takes risks and starts something new Entrepreneur as an innovator An individual developing something unique Entrepreneurial decision process Deciding to become an entrepreneur by leaving present activity Entrepreneurship Process of creating something new and assuming the risks and rewards  © Copyright Virtual University of Pakistan 5 Entrepreneurship—MGT602 THE NATURE AND IMPORTANCE OF ENTREPRENEURSHIP Lesson 02 VU LEARNING OBJECTIVES 1. To introduce the concept of entrepreneurship and its historical development. . To explain the entrepreneurial decision process. Desirability of New Venture Formation (Aspects of a situation that make it desirable to start a new company) The perception that starting a new company is desirable results from an individual’s culture, subculture, family, teachers and peers. American culture places a high value on being your own boss, being a success and making money therefore, it is not surprising to find a high rate of company formation in the United States. On the other hand in some countries making money is not as valued and failure may be a disgrace. The rate of business formation in these countries is not as high. Many subcultures that shape value systems operate within a cultural framework. Studies indicate that a high percentage of founders of companies had fathers and/or mothers who valued independence. Encouragement to form a company is also gained from teachers, who can significantly influence individuals. An area having a strong educational base is also a requirement for entrepreneurial activity. Peers are important, also, as is an area with an entrepreneurial pool and peer-meeting place. Possibility of New Venture Formation (Factors making it possible to create a new venture) Although the desire of new venture formation derived from the individual’s culture, subculture, family, teachers and peers needs to be present before any action is taken, the second feature necessary centers around this question â€Å"What makes it possible to form a new company? † Formal education nd previous business experience give a potential entrepreneur the skills needed to form and manage a new enterprise. Although educational systems are important in providing the needed business knowledge, individual will tend to be more successful in forming in fields in which they have worked. The government also contributes by providing the infrastructure to help a new venture. The market must be large enough and the entrepreneur must have the marketing know-how to put together the entire packa ge. Finally, financial resources must be readily available. Although most start-up money comes from personal savings, credit, and friends, but there is often a need for additional capital. Riskcapital availability plays an essential role in the development and growth of entrepreneurial activity.  © Copyright Virtual University of Pakistan 6 Entrepreneurship—MGT602 VU KEY TERMS Foundation companies A type of company formed from research and development that usually does not go public. Gazelles Very high growth ventures. Government as an innovator A government active in commercializing technology High-potential ventures. A venture that has high growth potential and therefore receives great investor interest Entrepreneurship Entrepreneurship within an existing business structure Iterative synthesis The intersection of knowledge and social need that starts the product development process Lifestyle firm A small venture that supports the owners and usually does not grow Ordinary innovation Z new product with little technological change Possibility of new venture formation Factors making it possible to create a new venture Copyright Virtual University of Pakistan 7 Entrepreneurship—MGT602 ENTREPRENEURIAL PROCESS/START UPS Lesson 03 LEARNING OBJECTIVES 1. To identify the basic types of start-up ventures. 2. To explain the role of entrepreneurship in economic development 3. To discuss the ethics and racial responsibility of TYPES OF START-UPS Life-Style Firms A life-style firm exists primarily to support the owners and usually has little growth opportunity. This type of firm may grow after several years to 30 or 40 employees. Foundation Companies VU A type of company formed from research and development that usually does not go public. This firm can grow in five to ten years from 40 to 400 employees. High-Potential Venture A venture has high growth potential and therefore receives great investor interest. The company may start out like a foundation company, but its growth is far more rapid. After five to ten years the company could employ around 500 employees. These firms are also called gazelles and are most important for the economic development of an area ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT The role of entrepreneurship in economic development involves initiating change in the structure of business and society. One theory of economic growth depicts innovation as the key, not only in developing new products, but also in stimulating investment interest. The new capital created expands the capacity for growth (supply side), and new spending utilizes the new capacity and output (demand side. In spite of the importance of investment and innovation in the economic development of an area, there is still a lack of understanding of few factors which are as follows: †¢ The product-evolution process is the process through which innovation develops and commercializes through entrepreneurial activity, which in turn stimulates economic growth. It begins with knowledge in the base technology and ends with products or services availabl e in the marketplace. †¢ The critical point in the process is the intersection of knowledge and a recognized social need, called the iterative synthesis. This point often fails to evolve into a marketable innovation. Most innovations introduced in the market are ordinary innovations, with little uniqueness. Technological innovations refer to new products with significant technological advancements. †¢ †¢ †¢ Breakthrough innovations mean the development of new products with some technological change. Regardless of the level of uniqueness or technology, each innovation evolves into and develops towards commercialization through one of three mechanisms: the government, entrepreneurship, or entrepreneurship. Entrepreneurship has assisted in revitalizing areas of the  © Copyright Virtual University of Pakistan 8 Entrepreneurship—MGT602 VU inner city. Individuals in inner-city areas can relate to the concept and see it as a possibility for changing their present situation. GOVERNMENT AS AN INNOVATOR A government active in commercializing technology is known as an innovative government. Commercializing technology is frequently called technology transfer. However, few inventions resulting from government-sponsored research have reached the commercial market. Most of the by-products from scientific research have little application to any social need. The government lacks the business skills needed for successful commercialization. Government bureaucracy and red tape also often inhibit the timely formation of the business. Recently, federal labs have been required to commercialize some of their technology each year and some are providing entrepreneurial training Intrapreneurship Intrapreneurship refers to entrepreneurship within an existing organization or business structure. Existing businesses have the financial resources, business skills, and arketing and distribution system to commercialize innovation successfully. Often the bureaucratic structure, emphasis on short-term profits, and structured organization inhibit creativity. Some corporations have tried to establish an Entrepreneurial spirit in their organization, some in the form of strategic business units (SBUs. ) Intrapreneurship can also bridge the gap between science and the ma rketplace. It is the practice of using entrepreneurial skills without taking on the risks or accountability associated with entrepreneurial activities. It is practiced by employees within an established organization using a systemized business model. Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources and capabilities of the larger firm to draw upon. Capturing the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc. ) adds to the potential of otherwise static organizations without exposing those employees or self mployed people to the risks or accountability normally associated with entrepreneurial failure. Employee Intrapreneur An employee Intrapreneur is the person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture, by operating within the organizational environment. Thus, Intrapreneurs are inside entrepreneurs who follow the goal of the organization. Employees, perhaps engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the resources, capabilities and security of the larger firm to draw upon. Capturing a little of the dynamic nature of entrepreneurial management (trying things until successful, learning from failures, attempting to conserve resources, etc. ) adds to the potential of an otherwise static organizations without exposing those employees to the risks or accountability normally associated with entrepreneurial failure Entrepreneurship The third method for bridging the gap between the science and the marketplace is via  © Copyright Virtual University of Pakistan 9 Entrepreneurship—MGT602 VU entrepreneurship. Many entrepreneurs have difficult time bridging this gap and creating new ventures. They may often lack managerial skills, marketing capabilities, or financial resources. They frequently do not know how to interface with banks, suppliers, customers, and distributors. Yet, entrepreneurship is the most effective method for bridging the gap and creating new enterprises, these activities affect an areas economy by building the economic base and providing jobs. ENTREPRENEURIAL CAREERS AND EDUCATION Since 1985 there has been an increased interest in entrepreneurial careers fostered by factors such as increased media coverage of entrepreneurs and employment shifts. A conceptual model for understanding entrepreneurial careers views the career stages as interacting with other stages and events in the individual’s life, the life-cycle approach. This approach conceptualizes entrepreneurial careers in nine categories. 1. Educational environment 2. The individual’s personality 3. Childhood family environment 4. Employment history 5. Adult development history 6. Adult family/non-work history 7. Current work situation 8. The individual’s current perspective 9. The current family situation Although there exist a common perception that entrepreneur are less educated than the general population however studies have found entrepreneurs overall and female entrepreneurs in particular, are far more educated than the general population. However, this education sometimes does not develop the specific skills needed in the venture, especially for women entrepreneurs. Childhood influences have been explored, particularly in terms of values and the individual’s personality . The traits most frequently researched are the need for achievement, locus of control, risk-taking, and gender identity. The research on the childhood family environment of the entrepreneur has had more definite results. Entrepreneurs tend to have self-employed fathers, and many also have entrepreneurial mothers. The family plays an important role in establishing the desirability of entrepreneurship as a career. Employment history also has an impact on entrepreneur careers in both positive and a negative sense. Entrepreneurs tend to have a higher probability of success when the venture created is in their field of experience. Negative displacement (such as dissatisfaction with various aspects of ones job) also encourages entrepreneurship. Although no definite research has been done on the adult development history of entrepreneurs, it appears to also affect entrepreneur’s careers. One’s development history has somewhat more of an impact on women, since they tend to start businesses at a later stage in life. There is a lack of data on adult family/non-work history and the available data adds little understanding towards entrepreneurial career development. Entrepreneurs are known for their strong work values, their long workdays, and their dominant management style. They tend to fall in love with the organization and will sacrifice almost Copyright Virtual University of Pakistan 10 Entrepreneurship—MGT602 VU anything in order for it to survive. While in college, few future entrepreneurs realize that they will pursue entrepreneurship as their major life goal. Relatively few individuals will start a business immediately after graduation. Entrepreneurship education is a fast growing area in colleges an d universities. While the courses vary by university, there is a great commonality, especially in the initial few courses. The skills required by entrepreneurs can be classified in to three main areas: 1. Technical skills involve such things as writing, listening, oral presentations, coaching, and technical know-how. 2. Business management skills include those areas involved in starting, developing and managing any enterprise. 3. Personal entrepreneurial skills differentiate an entrepreneur from a manager and include inner control (discipline), risk taking, innovativeness, persistence, visionary leadership, and being change oriented. These skills and objectives form the basis of the modular approach to an entrepreneurship curriculum. Today entrepreneurs are recognizing the need to learn some of the science of management in an MBA program in order to grow their businesses effectively in the global environment. ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEURS The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social responsibility. A managers attitudes concerning corporate responsibility tend to be supportive of laws and professional codes of ethics. Entrepreneurs have few reference persons, role models, and developed internal ethics codes. Entrepreneurs are sensitive to peers pressure and social norms in the community as well as pressures from their companies. While ethics refers to the â€Å"study of whatever is right and good for humans,† business ethics concerns itself with the investigation of business practices in light of human values. The word â€Å"ethics† stems from the Greek ethos, meaning custom and usage. Development of Our Ethical Concepts Socrates, Plato, and Aristotle provide the earliest writings dealing with ethical conceptions; earlier writings involving moral codes can be found in both Judaism and Hinduism. American attitudes on ethics result from three principle influences: Judeo-Christian heritage, a belief in individualism and opportunities based on ability rather than social status. Research on business ethics can be broken down into four broad classifications: 1. Pedagogically-oriented inquiry 2. Theory-building without empirical testing 3. Empirical research, measuring the attitudes and ethical beliefs of students and academic faculty 4. Empirical research within business environments THE FUTURE OF ENTREPRENE URSHIP In spite of the differences in definition of entrepreneurship, there are common aspects such as risk taking, creativity, independence, and rewards. Entrepreneurship is currently being embraced by educational institutions, governments, societies, and corporations. Schools are increasing their emphasis on entrepreneurship in terms of courses and academic research. In Europe many universities have started programs in entrepreneurship. There has also been an increase in academic research, endowed chairs and centers of Copyright Virtual University of Pakistan 11 Entrepreneurship—MGT602 VU entrepreneurial activity. Governments have also promoted the growth of entrepreneurship. Individuals are encouraged to form new businesses and provided tax incentives, roads, and a communications system to facilitate this creative process. Some state governments are developing strategies for fostering entrepreneurial a ctivity. The venture capital industry has benefited from lowering of capital gains tax rates and more relaxed rules regarding pension fund investment. Society’s support of entrepreneurship is critical in providing motivation and public support. The media has played a powerful role in developing public support. Media coverage uplifts the image of the entrepreneur and growth companies. Articles have appeared in newspapers such as New York Times, The Wall Street Journal, and the Washington Post. Business magazines such as Barrons, Business Week, Forbes, and Fortune have provided coverage. Magazines such as Black Enterprise, Entrepreneur, Inc. , and Venture focus on issues of the entrepreneurial process. Television on both a national and local level has highlighted entrepreneurship. Large companies will continue to have a special interest in Entrepreneurship in the future. The largest 15 companies account for over 20 percent of the total U. S. research and development. Other companies will create more new businesses through Entrepreneurship. KEY TERMS Product-evolution process Process for developing and commercializing an innovation Risk taking Taking calculated chances in creating and running a venture. Technological innovation A new product with significant technological advancement Technology transfer Commercializing the technology in the laboratories into new products  © Copyright Virtual University of Pakistan 12 Entrepreneurship—MGT602 THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND LEARNING OBJECTIV ES 1. To explain the aspects of the entrepreneurial process. 2. To explain the differences between entrepreneurial and managerial domains. 3. To explain the organizational environment conducive for entrepreneurship. 4. To identify the general characteristics of an Entrepreneur. 5. To explain the process of establishing entrepreneurship in an organization. VU Lesson 04 ENTREPR E NEURIAL PROCESS The entrepreneurial process involves finding, evaluating, and developing an opportunity by overcoming the strong forces that resist the creation of something new. Phase 1: Identifying and Evaluating the Opportunity Most good business opportunities result from an entrepreneur being alert to possibilities. Some sources are often fruitful, including consumers and business associates. Channel members of the distribution system-retailers, wholesalers or manufacturer’s reps-are also helpful. Technically-oriented individuals often identify business opportunities when working on other projects. Each opportunity must be carefully screened and evaluated-this is the most critical element of the entrepreneurial process. . The evaluation process involves looking at b. The creation and length of the opportunity c. Its real and perceived value d. Its risks and return. e. It’s fit with the skills and goals of the entrepreneur f. Its differential advantage in its competitive environment It is important to understand the cause of the opportunity, as the resulting opportunity may have a different market size and time dimension. The market size and the length of the window of opportunity are the primarily bases for determining risks and rewards. The risks reflect the market, competition, technology, and amount of capital involved. The amount of capital forms the basis for the return and rewards. The return and reward of the present opportunity needs to be viewed in light of any possible subsequent opportunities as well. The opportunity must fit the personal skills and goals of the entrepreneur. The entrepreneur must be able to put forth the necessary time and effort required for the venture to succeed. One must believe in the opportunity enough to make the necessary sacrifices. Opportunity analysis, or an opportunity assessment plan, should focus on the opportunity and provide the basis to make the decision, including: a. A description of the product or service b. An assessment of the opportunity c. Assessment of the entrepreneur and the team d. Specifications of all the activities and resources needed e. The source of capital to finance the initial venture The most difficult aspect of opportunity analysis is the assessment of the opportunity. Phase 2: Develop a Business Plan A good business plan must be developed in order to exploit the opportunity defined. A good business plan is important in developing the opportunity and in determining the resources required, obtaining those resources and successfully managing the venture.  © Copyright Virtual University of Pakistan 13 Entrepreneurship—MGT602 VU Phase 3: Determine the Resources Required. Assessing the resources needed starts with an appraisal of the entrepreneur’s present resources. Any resources that are critical must be distinguished from those that are just helpful. Care must be taken not to underestimate the amount and variety of resources needed. Acquiring needed resources, while giving up as little control as possible, is difficult. The entrepreneur should try to maintain as large an ownership position as possible, particularly in the start-up stage. As the business develops, more funds will probably be needed, requiring more ownership be relinquished. Alternative resource suppliers should be identified, along with their needs and desires, in order to structure a deal with the lowest cost and loss of control. Phase 4: Manage the Enterprise. The entrepreneur must employ these resources through implementation of the business plan. This involves implementing a management structure, as well as identifying a control system. KEY TERMS Administrative domain The ways managers make decisions Business plan The description of the future direction of the business Corporate culture The environment of a particular organization Entrepreneurial domain The ways entrepreneurs make decisions Entrepreneurial process The process through which a new venture is created by an entrepreneur Entrepreneurial culture The environment of an entrepreneurial-oriented organization Entrepreneurship Entrepreneurship within an existing business organization Opportunity identification The process by which an entrepreneur comes up with the opportunity for a new venture Opportunity parameters Barriers to new product creation and development Top management commitment Managers in an organization strongly supporting entrepreneurship Traditional managers Managers in a non-entrepreneurial-oriented organization Window of opportunity The time period available for creating the new venture  © Copyright Virtual University of Pakistan 14 Entrepre neurship—MGT602 VU THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued†¦) Lesson 05 LEARNING OBJECTIVES 1. To explain the aspects of the entrepreneurial process. 2. To explain the differences between entrepreneurial and managerial domains. 3. To explain the organizational environment conducive for entrepreneurship. 4. To identify the general characteristics of an entrepreneur. 5. To explain the process of establishing entrepreneurship in an organization. MANAGERIAL VERSUS ENTREPRENEURIAL DECISION MAKING The difference between the entrepreneurial and managerial styles involves five business dimensions. Strategic Orientation The entrepreneur’s strategic orientation depends on his or her perception of the opportunity. This orientation is most important when other opportunities have diminishing returns accompanied by rapid changes in technology, consumer economies, social values or political rules. When the use of planning systems is the strategic orientation, there is more pressure for the administrative domain to be operant. Commitment to Opportunity The entrepreneurial domainis pressured by the need for action and has a short time span in terms of opportunity commitment. The administrative domain (the ways mangers make decisions) is not only slow to act on an opportunity, but the commitment is usually for a longer time span. Commitment of Resources An entrepreneur is used to having resources committed at periodic intervals, often based on certain tasks or objectives being reached. In acquiring these resources the entrepreneur is forced to achieve significant milestones using very few resources. In the administrative domain, the commitment of resources is for the total amount needed. Administrative-oriented individuals receive personal rewards by effectively administering the resources under their control. Control of Resources The administrator is rewarded by effective resource administration and has a drive to own or accumulate as many resources as possible. The entrepreneur, under pressure of limited resources, strives to rent resources on an as-needed basis. Managerial Structure In the administrative domain, the organizational structure is formalized and hierarchical in nature. The entrepreneur employs a flat organizational structure with informal networks. CAUSES FOR RECENT INTEREST IN INTRAPRENEURSHIP  © Copyright Virtual University of Pakistan 15 Entrepreneurship—MGT602 VU Interest in intrapreneurship has resulted from events occurring on social, cultural, and business levels. There is an increasing interest in â€Å"doing your own thing. † Individuals frequently desire to create something of their own. They want responsibility and want more freedom in their organizations. Frustration can develop and result in the employee becoming less productive or leaving the organization. This has recently caused more discontent in structured organizations. When meaning is not provided within the organization, individuals often search for an institution, such as entrepreneurship, that will provide it. Intrapreneurship is one method for stimulating and capitalizing on those who think that something can be done differently and better, such as Xerox Corporation’s commitment to Xerox Technology Ventures. It is important to instill the intrapreneurial spirit in an organization in order to innovate and grow. In a large organization problems occur that thwart creativity and innovation. This growth and diversity that can result are critical, since large corporations are more efficient in a competitive market than are smaller firms. The resistance against flexibility, growth, and diversification can be overcome by developing a spirit of entrepreneurship, called Intrapreneurship, within the existing organization. There are social, cultural, and business pressures for Entrepreneurship. Hyper competition has forced U. S. companies to focus on new product development and increased productivity. Reductions in large corporation’s staff are being absorbed in the workforce, particularly in small businesses. Entrepreneurial endeavors consist of four key elements. 1. New business venturing refers to the creation of new business within an existing organization. 2. Organizational innovativeness refers to product and service innovation with an emphasis on development and innovation in technology. 3. Self-renewal reflects the transformation of organizations through the renewal of the key ideas on which they are built. 4. Proactiveness includes initiative and risk taking, as well as competitive aggressiveness KEY TERMS Administrative domain The ways managers make decisions Business plan The description of the future direction of the business Corporate culture The environment of a particular organization Entrepreneurial domain The ways entrepreneurs make decisions Entrepreneurial process The process through which a new venture is created by an entrepreneur Entrepreneurial culture The environment of an entrepreneurial-oriented organization Entrepreneurship  © Copyright Virtual University of Pakistan 16 Entrepreneurship—MGT602 Entrepreneurship within an existing business organization Opportunity identification The process by which an entrepreneur comes up with the opportunity for a new venture Opportunity parameters Barriers to new product creation and development Top management commitment Managers in an organization strongly supporting Entrepreneurship Traditional managers Managers in a non-entrepreneurial-oriented organization Window of opportunity The time period available for creating the new venture VU  © Copyright Virtual University of Pakistan 17 Entrepreneurship—MGT602 VU THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued†¦) Lesson 06 LEARNING OBJECTIVES 1. 2. 3. 4. 5. To explain the aspects of the entrepreneurial process. To explain the differences between entrepreneurial and managerial domains. To explain the organizational environment conducive for entrepreneurship. To identify the general characteristics of an entrepreneur. To explain the process of establishing entrepreneurs hip in an organization. CORPORATE VERSUS INTRAPRENEURIAL CULTURE Smaller, aggressive, entrepreneurial firms are developing more new products and becoming dominant in certain markets. Many companies are attempting to create the same spirit, culture, and rewards of entrepreneurship in their organizations. The typical corporate culture has a climate and reward system that favors conservative decision making. Emphasis is on gathering large amounts of data as the basis for a rational decision. Risky decisions are often postponed until hard facts are gathered or a consultant is hired. Often there are so many approvals required that no individual feels personally responsible for the project. The guiding principles in a traditional corporate culture are: 1. 2. 3. 4. 5. 6. Follow instructions given Do not make mistakes Do not fail Do not take initiative Stay within your turf and protect your backside This restrictive environment is not conducive to creativity, flexibility, and risk taking The guiding principles of intrapreneurs Aspects of an Entrepreneurial culture are quite different: 1. 2. 3. 4. 5. Develop visions, goals, and action plans Be rewarded for actions taken Suggest, try, and experiment Create and develop Take responsibility and ownership There are differences in the norms of the two cultures. The traditional culture is hierarchical in nature, with established procedures, lines of authority, and control mechanisms. These support the present corporate culture, and do not encourage new venture creation. The culture of an intrapreneurial firm has a flat organizational structure with networking, teamwork, sponsors, and mentors. Close working relationships help establish an atmosphere or trust that facilitates accomplishment of visions. Individuals make suggestions across functional areas, resulting in cross-fertilization of ideas. The two cultures produce different types of individuals and management styles.  © Copyright Virtual University of Pakistan 18 Entrepreneurship—MGT602 VU Motivation Traditional managers are motivated primarily by promotion and typical corporate rewards. Entrepreneurs and intrapreneurs thrive on independence and the ability to create. Intrapreneurs expect their performance to be suitably rewarded. There are also time orientation differences. Managers emphasize the short run, entrepreneurs the long run, and intrapreneurs somewhere in between. Intrapreneurs use a midpoint mode between delegation of managers and direct involvement of entrepreneurs. Entrepreneurs and intrapreneurs are moderate risk takers; managers are much more cautious. Most entrepreneurs fail at least once, and Intrapreneurs learn to conceal risky projects from management until the last possible moment. Traditional managers tend to be most concerned about those at higher levels, entrepreneurs serve self and customers, and intrapreneurs add sponsors. CLIMATE FOR INTRAPRENEURSHIP In establishing an Intrapreneurial environment, certain factors and leadership characteristics need to be present. The first of these is that the organization operates on the frontiers of technology. Since research and development are key sources for new product ideas, the firm must operate on the cutting edge of technology and encourage and supporting new ideas instead of discouraging them. Second is experimentation, or trial and error, is encouraged. Successful new products usually do not appear fully developed; instead they evolve. A company wanting to establish an intrapreneurial spirit has to establish an environment that allows mistakes and failures. Without the opportunity to fail, few corporate intrapreneurial ventures will be developed. Third an organization should make sure that there are no initial opportunity parameters, such as turf protection, inhibiting creativity in new product development. Fourth, the resources of the firm need to be available and easily accessible. Often, insufficient funds are allocated not to creating something new but instead to solving a problem that have an immediate effect on the bottom line. Some companies, such as Xerox, 3M, and ATT have established separate venture capital areas for funding new internal ventures. Fifth a multidisciplinary team approach needs to be encouraged. One key to Intrapreneurial success is the existence of â€Å"skunkworks† involving key people. Developing the needed team work for a new venture is further complicated by the fact that a team member’s promotion within the corporation is related to performance in the current position, not in the new venture. The corporate environment must establish a long time horizon for evaluating the success of the overall program. Sixth the spirit of intrapreneurship cannot be forced on individuals; it must be voluntary. Most managers in a corporation are not capable of being successful intrapreneurs. Those who do emerge from this self selection process must be allowed the latitude to carry a project through to completion. An intrapreneur falls in love with the new venture and will do almost anything to ensure its success. The seventh characteristic is a reward system. The intrapreneur needs to be appropriately rewarded for the energy and effort expended on the new venture. An equity position in the new venture is one of the best motivational methods. Eight a corporate environment favorable for intrapreneurship has sponsors and champions throughout the organization that supports the creative activity and resulting failures. Finally the intrapreneurial activity must be whole-heartedly supported by top management.  © Copyright Virtual University of Pakistan 19 Entrepreneurship—MGT602 VU THE ENTREPRENEURIAL AND INTRAPRENEURIAL MIND (continued†¦) Lesson 07 LEARNING OBJECTIVES 1. 2. 3. 4. 5. To explain the aspects of the entrepreneurial process. To explain the differences between entrepreneurial and managerial domains. To explain the organizational environment conducive for entrepreneurship. To identify the general characteristics of an Entrepreneur. To explain the process of establishing entrepreneurship in an organization. INTRAPRENEURIAL LEADERSHIP CHARACTERISTICS There are certain individual characteristics needed for a person to be successful Entrepreneurs, including: 1. Understanding the environment 2. Being visionary and flexible 3. Creating management options 4. Encourage teamwork while employing a multi-disciplined approach 5. Encouraging open discussion 6. Building a coalition of supporters, and persisting An Entrepreneur needs to understand all aspects of the environment. Part of this ability is reflected in individual’s level of creativity. Creativity tends to decrease with age and education. The individual must be creative and have a broad understanding of the internal and external environments of the corporation. The intrapreneurial person must be a visionary leader-a person who dreams great dreams. Leadership is the ability to dream great things and communicate them in a way that people say yes to being a part of the dream. To establish a successful new venture, the intrapreneurial leader must have a dream and overcome all obstacles to achieve it. The third necessary characteristic is that the intrapreneur must be flexible and create management options. An intrapreneur is open to and encourages change. By challenging the beliefs and assumptions of the corporation, an intrapreneur can create something new in the organization structure. He or she must possess the ability to encourage teamwork and use a multi-disciplined approach. Every new company formation requires a broad range of business skills. The intrapreneur must be a good diplomat to minimize disruption. Open discussion must be encouraged to develop a good team for creating something new. Many corporate managers have forgotten that frank, open discussion is part of the learning process. A successful venture can be formed only when the team feels the freedom to disagree and to critique an idea. The degree of openness among the team depends on the degree of openness of the intrapreneur. Openness leads to a strong coalition of supporters and encouragers. The intrapreneur must encourage each team member, particularly during hard times. A good intrapreneur makes everyone a hero. Only through persistence will a new venture be created and successful commercialization result. ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATION To establish an intrapreneurial environment, the organization must implement a procedure. This can be done internally, but it is easier to use an outsider to facilitate the process. This is particularly true when the environment is very traditional. There are some steps involved in it. Step 1: The first step is to secure a commitment to intrapreneurship in the organization by top, upper, and middle management. Without top management commitment, the organization will never be able to make the necessary changes. Once top management has committed to intrapreneurship for a sufficient length of time, the concept is introduced throughout the organization. This is effectively accomplished through seminars. General guidelines need to be  © Copyright Virtual University of Pakistan 20 Entrepreneurship—MGT602 VU stablished for intrapreneurial venture development. Next, intrapreneurial leaders need to be identified, selected, and trained. Step 2: Ideas and general interest areas should be identified, along with the amount of risk money that is available. The overall expectat ions and target results should be established, specifying time frame, profitability requirements, and impact of the organization. A mentor/sponsor system needs to be established. Step 3: A company needs to use technology to make itself faster and more flexible. Technology has allowed small companies to act like they are big ones. Large companies can use technology to make them responsive and flexible. Step 4: The organization can use a group of managers to train and share their experiences with other members. These sessions should be conducted one day per month for a specified period of time. Information about intrapreneurship and about the company’s specific activities should be well publicized. Step 5: The organization needs to develop ways to get closer to its customers by tapping the data base, hiring from smaller rivals, and helping the retailer. Step 6: An organization must learn to be more productive with fewer resources. With middle management cutbacks, more control has been given to lower levels of the organization. The span of control should be increased. Step 7: The organization needs to establish a strong support structure. Because they do not immediately affect the bottom line, intrapreneurial activities can be overlooked and receive little funding. These ventures require flexible, innovative behavior, with the intrapreneurs having total authority over expenditures and access to funds. Step 8: The support must involve trying the rewards to the performance of the intrapreneurial unit. This encourages team members to work harder and compete more effectively. The equity portion of the compensation is particularly difficult to handle. Step 9: The organization needs to implement an evaluation system that allows successful units to expand and unsuccessful ones to be eliminated. PROBLEMS AND SUCCESSFUL EFFORTS Intrapreneurship, also called corporate venturing, is not without problems. One study found that new ventures started within a corporation performed worse than those started independently. Independent start-ups tend to outperform corporate start-ups. There are many examples of companies that have successfully implemented intrapreneurship. 3M allows employees to devote 15 percent of their time to independent projects. After failing to recognize the potential of Wozniak’s personal computer, Hewlett-Packard has taken steps to take advantage of future opportunities. Even IBM has developed the independent business unit concept. The problems of ntrapreneurship are not insurmountable, and the concept can lead to new products, growth and the development of an entirely new corporate environment and culture.  © Copyright Virtual University of Pakistan 21 Entrepreneurship—MGT602 THE INDIVIDUAL ENTREPRENEUR Lesson 08 LEARNING OBJECTIV ES 1. To iden tify some key entrepreneurial feelings and motivations. 2. To identify key elements in an entrepreneur’s background. 3. To discuss the importance of role models and support systems. 4. To identify the similarities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs. VU ENTREPR E NEURIAL FEELINGS There is no â€Å"true entrepreneurial profile†- entrepreneurs come from many educational backgrounds, family situations, and work experiences. A potential entrepreneur may presently be a nurse, secretary, assembly line worker, sales person, mechanic, home maker, manager or engineer. A potential entrepreneur can be male or female and of any race or nationality. Locus of Control One concern people have when forming is whether they will be able to sustain the drive and energy required to form something new and to manage the new enterprise and make it grow. While research results are inconsistent, internal control seems to be a characteristic of entrepreneurs. Internal beliefs appear to differentiate entrepreneurs from the general public, but not from managers. Managers and entrepreneurs both have an internality tendency. Feelings about Independence and Need for Achievement. The entrepreneur also has the need for independence, to do things in his or her own way and time. Another controversial characteristic is the entrepreneur’s need for achievement. McClelland specified three attributes as characteristics of entrepreneurs: 1. Individual responsibility for solving problems and setting and achieving goals. 2. Moderate risk taking as a function of skill. 3. Knowledge of results of decision/task accomplishment. McClelland concluded that a high need for achievement leads individuals to engage in entrepreneurial behavior, although other studies have been inconsistent. Risk Taking Risk taking seems a part of the entrepreneurial process. However, it has not yet been empirically established whether risk-taking is a distinguishing characteristics of entrepreneurs. ENTREPR E NEURIAL BACKGRO UND AND CHARACT E RIST ICS Only a few background characteristics have differentiated the entrepreneur from the general populace or managers. Childhood Family Environment The impact of birth order and social status has had conflicting research results. There is strong evidence that entrepreneurs, both male and female, tend to have self-employed or entrepreneurial fathers. Having a father who is self-employed provides a strong inspiration in the example of independence and flexibility of self-employment. This feeling of independence is often further enforced by an entrepreneurial mother. The overall parental  © Copyright Virtual University of Pakistan 22 Entrepreneurship—MGT602 VU relationship may be the most important aspect of the childhood environment in establishing the desirability of entrepreneurial activity. Parents of entrepreneurs need to be supportive and encourage independence, achievement, and responsibility. This supportive relationship appears to be most important for females. Female entrepreneurs tend to grow up in middle- to upper-class environments, where families are child-centered, and are similar to their fathers in personality. KEY TERMS Departure points The activities occurring when the venture is started Inventor An individual who creates something new Locus of control An attribute indicating the sense of control that a person has over life Moral-support network Individuals who give psychological support to an entrepreneur Entrepreneurship – MGT602 VU  © Copyright Virtual University of Pakistan 23 Entrepreneurship—MGT602 VU THE INDIVIDUAL ENTREPRENEUR (continued†¦) Lesson 09 LEARNING OBJECTIVES 1. To identify some key entrepreneurial feelings and motivations. 2. To identify key elements in an entrepreneur’s background. 3. To discuss the importance of role models and support systems. 4. To identify the similarities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs. ENTREPRENEURIAL BACKGROUND AND CHARACTERISTICS Education Education appears important in the upbringing of the entrepreneur, in the level of education obtained and in playing a major role in coping with problems. Although formal education is not necessary for starting a new business, it does provide a good background. In education, female entrepreneurs previously experienced some disadvantage, with few having degrees in engineering, science, or math. The ability to deal with people and communicate clearly in written and spoken work is also important. Personal Values Studies have failed to indicate that entrepreneurs can be differentiated on personal valued from managers, unsuccessful entrepreneurs, or the general public. Leadership, support, aggression, benevolence, conformity, creativity, veracity, and resource seeking may also be important. A successful entrepreneur is frequently characterized as a winner; winning may be a prerequisite for his or her actually becoming one. Age Entrepreneurial age is the age of the entrepreneur reflected in the experience. Entrepreneurial experience is one of the best predictors of success. In chronological age, most entrepreneurs start their careers between ages 22 and 55. Earlier starts in an entrepreneurial career seem to be better than later ones. Generally, male entrepreneurs start their first venture in their early 30s, while women tend to do so in their middle 30s. Work History Dissatisfaction with one’s job often motivates the launching of a new venture. Previous technical and industry experience is also important once the decision to start a business is made. Experience in the following areas is particularly important: financing; product or service development; manufacturing; development of distribution channels; and preparation of a marketing plan. As the venture becomes established, managerial experience and skills become more important. Entrepreneurial experience becomes increasingly important as the complexity of the venture increases. MOTIVATION While motivations may vary, the reason cited most often for becoming an entrepreneur independence-not wants to work for anyone else. Other motivating factors differ between male and female entrepreneurs. Money is the second reason for men’s starting a venture. Job satisfaction, achievement, opportunity, and money are the second order reasons for women.  © Copyright Virtual University of Pakistan 24 Entrepreneurship—MGT602 VU KEY TERMS Motivations That causes people to do something Need for achievement An individual’s need to be recognized Need for independence. Being one’s own boss-one of the strongest needs of an entrepreneur Professional-support network Individuals who help the entrepreneur in business activities Role models Individuals influencing an entrepreneur’s career choice and style Social status The level at which an individual in viewed by society Work history The past work experiences of an individual  © Copyright Virtual University of Pakistan 25 Entrepreneurship—MGT602 VU THE INDIVIDUAL ENTREPRENEUR (continued†¦) Lesson 10 LEARNING OBJECTIVES 1. To identify some key entrepreneurial feelings and motivations. 2. To identify key elements in an entrepreneur’s background. 3. To discuss the importance of role models and support systems. 4. To identify the similarities and differences between male and female entrepreneurs. 5. To explain the differences between inventors and entrepreneurs. ROLE MODELS AND SUPPORT SYSTEMS One of the most important factors influencing entrepreneurs in their career choice is role models. Role models can be parents, relatives, or successful entrepreneurs in the community. Role models can also serve in a supportive capacity as mentors during and after the new venture is launched. This support system is most crucial during the start-up phase. It is important that an entrepreneur establish connections to support resources early in the venture formation process. As contacts expand they form a network with density (extensiveness of ties between two individuals) and centrality (the total distance of the entrepreneur to all other individuals. ) The strength of ties between the entrepreneur and any individual is dependent on the frequency, level, and reciprocity of the relationship. An informal network for moral and professional support benefits the entrepreneur. Moral-Support Network It is important for the entrepreneur to establish a moral support network of family and friends. Most entrepreneurs indicate that their spouses are their biggest supporters. Friends can provide advice that is more honest than that received from others, plus encouragement, understanding, and assistance. Relatives can also be sources of moral support, particularly if they are also entrepreneurs. Professional-Support Network The entrepreneur also needs advice and counsel, which can be obtained from members of a professional support network. A mentor-protege relationship is an excellent way to secure the needed professional advice. The mentor is a coach, sounding board, and advocate. The individual selected needs to be an expert in the field. An entrepreneur can initiate the â€Å"mentor-finding process† by identifying and contacting a number of experts. The mentor should be periodically apprised of the progress of the business so that a relationship can gradually develop. Another source of advice is a network of business associates. Self-employed individuals who have experience in starting a business are good sources. Clients and buyers are also important as they provide word-of-mouth advertising. Suppliers are good components of the professional-support network-they help to establish credibility with creditors and customers, and provide good information on trends in the industry. Trade associations are good network additions, as they keep up with new developments and can provide overall industry data. Affiliations ith individuals developed in hobbies, sporting events, civic involvements and school alumni groups are excellent sources of referrals, advice, and information. Each entrepreneur needs to establish both a moral- and a professional-support network to share problems with and gain overall support. MALE VERSUS FEMALE ENTREPREN EURS Women are now starting new ventures at three times the rate of men. Women form over 70  © Copyright Virtual University of Pakistan 26 Entrepreneurship—MGT602 VU percent of all new businesses. Women now own over 8. 5 million small businesses, an increase of over 45 percent since 1990. In some respects female entrepreneurs possess very different motivations, business skills, and occupational backgrounds. Factors in the start-up process for male and female entrepreneurs are different, especially in such areas as support systems, sources of funds, and problems. Men are motivated by the drive to control their own destinies. Women tend to be more motivated by the need for achievement arising from job frustration. Departure points and reasons for starting the business are similar for both men and women. Both generally have a strong interest and experience in the area of their venture. For men, the transition to a new venture is easier when the venture is an outgrowth of a present job. Women often leave a previous occupation with a high level of frustration and enthusiasm for the new venture rather than experience. Start-Up Financing Males often have investors, bank loans, or personal loans in addition to personal funds as sources of startup capital. Women usually rely solely on personal assets or savings. Obtaining financing and lines of credit are major problems for women. Occupations Both groups tend to have experience in the field of their ventures. Men more often have experience in manufacturing, finance, or technical areas. Most women usually have administrative experience, often in service-related fields. Personality Both men and women tend to be energetic, goal-oriented, and independent. Men are often more confident and less flexible and tolerant than women. Backgrounds The backgrounds of male and female entrepreneurs tend to be similar. Women are little older when they embark on their careers. Men often have studied in technical- or business-related areas, while women tend to have liberal arts education. Many women busi How to cite Enterperneurship and Notes, Papers

Western Canada Concept Essays - Western Canada, Canada,

Western Canada Concept The Western Canada Concept The Western Canada Concept is a separatist party led by Alberta lawyer Doug Christie. The party is devoted to a peaceful secession of the four Western provinces and the two territories from Canada. By means of four referenda held in each respective western province, the Western Canada Concept would establish an independent nation. A wide spectrum of reasons, encompassing political, economic, and cultural issues, fuels the group's drive for a sovereign, united, West. The Western Canada Concept, through referenda and economic stability, insists that a sovereign West would better serve the needs of Western Canadians, which have been ignored by governments of the recent past. Reasons for Western Independence According to David Christie, leader of the Western Canada Concept, reasons for western separation abound, touching each area of Western Canadians' lives. Many of these stem from a deep-rooted feeling of western alienation. During the Trudeau era, the majority of Liberal seats in the House of Commons was heavily concentrated east of the Manitoba border. Through unpopular government decisions, such as the management of Alberta's petroleum industry, some westerners began to feel that the government did not serve their needs. Manipulating a famous Abraham Lincoln quote illustrates this belief perfectly - since the government was elected by Central Canada, it must be a government of Central Canada, for Central Canada. This distribution of power in the House of Commons, a primary reason for Western Independence, has become a platform for many western politicians. One concern is that there is little or no checks on the Prime Minister's agenda where regional equality is concerned. The Prime Minister is from one province, can be elected into power with only the support of a single region, and can run the entire country accordingly. Christie believes that the only way to keep Central Canada, the primary source of power for most recent governments, in check is to amend the Senate. The system by which Canada should model their Senate is the American system, in which the President is kept in check by equally distributed Senators. Such wishes for Senate reform have long been embraced by western parties of the past such as the Progressives, Social Credit, the CCF, the United Farmers of Alberta, and most recently, the Reform Party of Canada. Since the Reform Party merged with splinter Conservatives to form t he Canadian Alliance Party, its agenda, according to Christie, has become more national. If the Alliance, once a defender of western ideals, wishes to come to power, support from Central Canada is necessary. Thus, they seemingly have abandoned their fight for Senate reforms to appear more palatable to Ontario voters. If Western Canadians want these reforms, they cannot expect a national party desperate for Central Canadian support to act on their behalf. Rather, secession is seen as the only way to draw attention to our concerns. As Christie put it, ?The major reason the political power of Ontario and Quebec has never been challenged is simply because the West has never considered the option of independence.? In addition to the aforementioned political reasons, the Western Canada Concept has put forward economic reasons for Western Independence. In light of the fact that the West produces 52% of the Gross National Product in primary sector industries such as fishery, forestry, mining, and agriculture, and 90% of the petroleum production with only 27% of the population, the West should be able to sustain itself economically. Furthermore, the West fares well on the international market. Of the provinces, only British Columbia, Alberta, and Saskatchewan export more than they import. Although the West seems to make a profit internationally, it is, according to Christie, being robbed from home. A ?colonial economy?, where Central Canada produces 80% of the country's manufactured goods, and where tariffs prevent the other provinces from buying elsewhere, is preventing the West from flourishing economically. Again, since national parties with an interest in staying in power cannot effect any cha nge in policy that might anger Central Canadians, the only answer is independence. The most difficult to defend, but most important reasons for independence, according to Christie, are cultural reasons. It is tricky for Western Canadian Concept members to air their views on culture as they

Children’s Hospital and Clinics Essays

Children’s Hospital and Clinics Essays Children’s Hospital and Clinics Essay Children’s Hospital and Clinics Essay Due to a patient near fatal accident, the children’s hospital and clinics were looking for any effort to provide a safety patient culture. Julie Morath was hired in 1999 to improve hospital operations; she wanted to make Safety the top priority of the hospital. Julie Morath directed and begun setting up the Patient Safety Initiative at Children’s Hospital and Clinics by making employees obtain the mindset of safety and building a culture. The key steps to her patient safety initiative were the blameless patient safety reporting system, making focus groups, and setting up a committee of patient safety practice. During each process of the patient safety initiative at Children’s Hospital and Clinics there were many positive and negative effects of each step. The key elements of Patient Safety Initiative were followed by three steps, the first step was presentations that she conducted to the hospital staff about the national research and medical errors. The second step was focus groups that focused on the patient safety issues at Children’s Hospitals and Clinics. The third step was to make the initiative more strategic by developing it. Morath wanted to create a culture where she had the concept of â€Å"do not harm† was clearly developed rather than expressly stated. She wanted to focus her culture based on collaboration among others and operations around the science and sense of safety. When she came into Children’s and clinic, her main objective was making safety the top priority. According to exhibit 10, you can see that the safety reports have been steady improving since she got hired. One of the key elements of Patient Safety Initiative was to transform the organizational culture in order to provide an environment that would be able to discuss medical accidents in a proper manner. She wanted to embrace a culture that welcoms communication about safety issues. She enforces the idea of learning from past mistakes rather then pointing fingers whenever there was a mistake. There was the patient safety dialogues which created a sessions which all of the employees come together to talk and discuss the research of medical safety. Blameless reporting was also part of building the culture and this was a system designed to report medical accidents without the fear of being punished. According to exhibit 7, the blameless report help make the line workers to find out how to eliminate breakdowns. One of the weaknesses of the building culture was everyone was not happy about this approach. Many employees believed itwould be more of the employee lack of ability instead of the failed system. Many were worried that it was hard to actually find out who the poor workers were because of the blameless reports. The second element was to develop the infrastructure that was required to direct safety improvements. This was a reporting system that examines serious accidents and it was responsible for approving all of the major policy changes. Patient safety steering committee was formed and they would set the goals for the safety initiative. Exhibit 9 below shows all of the members that were in the committee. When developing the infrastructure, this allowed focus event studies which they would be able to conduct investigations after any serious medical accidents. The focused event studies helped identified the sequences of events accurately as possible, and this helps tell all of the system failures. The weakness in the process of developing the infrastructure was that many employees had the concern that they didn’t have enough time, staff, or resources to follow up on the issues. There was another issue about the recommended changes that was forced and to meet the effectiveness of the change. The last concern about developing the infrastructure was if this approach actually changed the hospitals legal risk profile. The third element was to launch a project to examine the medication administration system at the hospital. This approach was to achieve the goal of having zero defects in the administration system. The purpose of the medication administration system was to improve the safety of the patient by moderating the system and processes. Safety action teams were formed and it was eight employees that came together to discuss the problems and they way it could be improved. The strength of this was that it could provide a powerful vehicle for workers to get out the unnecessary complexity and remove barriers. The barriers that Morath faced as she tried to encourage people to discuss medical errors more openly is one thing she did was she presented data from the Harvard Medical practice study on the frequency and the causes of medical errors. The staff then came to mind that the events that occur at children’s happen along with other colleagues. She convinced everyone that errors were a problem and that it happens to all care organizations. She then tried to persuade Children’s hospital staff about talking openly about errors because open discussion will eventually improve patient care. She then conducted focus groups, sheinvolved staff from other areas and she did get people more focus about coming up with ways to improve the patient safety. Overall, she conducted 18 groups that included many of the staff through the hospital and this created more awareness and many felt free to talk about their experiences with medical errors. According to exhibit 10, there issue was also the parents who were concerned so a parent group was formed to keep them updated on the information. When she conducted the strategic plan, she summarizes the components of the strategic plan by calling it SAFE. The acronym stand for safety, access, financial, and experience, each of the categories had a clear goal and what to do to accomplish them. My assessment of Morath’s leadership of the organization change process at Children’s hospital and Clinics was that she was really impassionate about safety. It stated in the article that her leadership was going to be hard to replace and all the effort she put into the hospital can go to a fad. The central challenge that she faced was that to change people mindsets towards accident in the medical field. She wanted to change it from a penalty environment to a learning experience environment. Another challenge she faced was getting employees to own to a mistake without the fear of getting in trouble. The key activities that she initiated was the learning from past mistakes environment instead of blaming. In stage 1 of the changing process, her system was very encouraging and more employees were more willing to share their mistakes. In stage 2 and 3, the system believed that mistakes occurred because of drawbacks in the processes rather then the ability of the staff. Judith Morath had the right mindset when it came to making safety the top priority at Children’s Hospital and Clinics. There were many issues such that dealt with disclosure and legal risk, accountability, measuring results, and leadership. When it came to disclosure and legal risk, she worried about the benefits of enhancing disclosure to patients and families exceeded the risk of additional lawsuits. There was a belief that the respect with the parents involvement in the safety improvement effort. She also had the challenge of accountability, many of the unit managers and administrators were concern over the blameless reporting and that staff should be responsible for the accident. They believed that there should be consequences and accountability for the poor performance. Also the measuring results didn’t match up well. According to exhibit 10, she wasn’t able tojustify the financial results and the benefits outweighed the costs.

Using the Spanish Verb Pensar

Using the Spanish Verb Pensar Pensar typically means to think, but it is not always used in the same way as the English verb. Most significantly, the words that follow pensar might not be the ones you would expect. Keep in mind that pensar is conjugated irregularly. When the stem pens- is stressed, it becomes piens-. Thus, the present indicative forms are pienso (I think), piensas (you think), piensa (he/she/you think), pensamos (we think), pensis (you think), piensan (they/you think). Here are the main uses of pensar: Using Pensar by Itself Most frequently, pensar, when used by itself, is the equivalent of to think. Pienso, luego existo. (I think, therefore I am.)No pienso mal de ellos. (I dont think bad of them.)El que piensa demasiado siente poco. (The one who thinks too much feels little.) Using Pensar Que Pensar que is a very common way of indicating opinions or beliefs. It often is translated appropriately as to believe rather than to think. In the positive form, it is followed by a verb in the indicative mood. Note that while que in this usage usually can be translated to English as that, it often can be left untranslated, as in third and fourth examples. Pienso que vivo como un cerdo. (I think that I live like a pig.)Mi madre piensa que el doctor es culpable. (My mother believes that the doctor is at fault.)No quiero pensar que me equivoquà ©. (I dont want to believe I made a mistake.)Tambià ©n pensbamos que la recuperacià ³n econà ³mica iba a ser ms rpida. (We also used to believe the economic recovery was going to be quicker.) When used negatively, no pensar que is followed in standard Spanish by a verb in the subjunctive mood. It is not unusual, however, to heard the indicative mood used in casual Spanish. No pienso que seamos diferentes. (I dont believe we are different.)No pensbamos que fueran a darnos problemas. (We didnt think they were going to give us any problems.)Mis amigos no piensan que yo tenga ms de 21 aà ±os. (My friends dont believe Im more than 21 years old.) Using Pensar De Pensar de is another way to say to have an opinion about. Esto es lo que pienso de tu regalo. (This is what I think about your gift.)Tenemos que cambiar de lo que pensamos de nosotros mismos. (We need to change what we think about ourselves.)Ya he indicado antes lo que pienso de la clase. (I have already indicated what I think about the class.)No es bueno preocuparse por lo que los otros piensan de usted. (It isnt good to worry yourself about what others think about about you.) Pensar sobre can also mean to have an opinion about, especially when used in a question. Pensar de is more common.  ¿Quà © piensas sobre la nueva web? (What do you think about the new web site?) ¿Quà © piensan sobre los ataques suicidas como instrumento tctico para ser utilizado en una guerra? (What do they think about suicide attacks as a tactical instrument to be used in a war?) Using Pensar En When followed by en, pensar typically means to think about in the sense of having ones thoughts focus on something. Note that this isnt the same as using to think about in the sense of having an opinion. Estoy pensando en ti. (Im thinking about you.)Pablo no piensa en los riesgos. (Paul doesnt think about the risks.)Las chicas sà ³lo piensan en divertirse. (The girls think only about having fun.)Nadie piensa en cambiar las baterà ­as. (Nobody thinks about changing the batteries.) Pensar sobre can mean basically the same thing as pensar en but is much less common and is probably overused by English speakers speaking Spanish as a second language or when translating from English to Spanish. Pienso sobre eso dà ­a y noche. (I think about it day and night.)Primero hacen y luego piensan sobre ello. (First they acted, and then they thought about it.) Following Pensar With an Infinitive When followed by an infinitive, pensar is used to indicate plans or intentions. Pensamos salir maà ±ana. (Were intending to leave tomorrow.)Yo pienso estudiar medicina de veterinaria en la universidad. (Im planning on studying veterinary medicine at the university.)Pensaron salir de Venezuela, pero decidieron permanecer. (The were planning to leave Venezuela, but they stayed.)

History of Maya Essay Example | Topics and Well Written Essays - 2750 words

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An Analysis Of Business And Financial Performance Of Tesco Finance Essay

An Analysis Of Business And Financial Performance Of Tesco Finance Essay INTRODUCTION 1.1Topic Chosen This research and analysis report is about The business and financial performance of Tesco plc over a three year period from an investors point of view. The analysis will be carried out by looking at the key ratios, past trend and other important aspects with an aim to serve the current and prospective future investors in making investment decision. Quantative analysis which is based on financial aspects cannot give always the true picture so this analysis is also look at the non financial measures. J Sainsbury, one of the close competitor in UK has been chosen to compare with the Tesco plc to make the analysis more meaningful. Reason for the topic chosen As I am interested in analysing Business and financial performance in my previous studies so I have chosen this topic 8. This report will give me an opportunity to enhance my knowledge and chance to test my analytical skill. The reason for choosing Tesco for this research and analysis project is because I am always interested in retail sector and one of the most successful company in retail sector is Tesco in UK .Tesco currently hold more than 30% market share in UK with leading in supermarket (Douglas Hamilton, www.heraldscotland.com 15th Sep. 2010). Tesco is one of the fastest growing successful supermarket despite of many rivalry in same sector. Due to the fact of closest competitor J Sainsbury which is the third largest supermarket with market share around 16%, is chosen to compare the Business and Financial performance of Tesco. Tesco which used to be a food retail market is now expanding its territory of business from food retailer to various products under one roof such as furniture, electronic, mobile, financial services etc. The another expansion of Tesco will be the Tesco Bank (http://www.ft.com/cms/s/0/40d7a0dc-c5af-11df-ab48-00144feab49a.html). Sir Terry Lee Promise to build the peoples bank by capitalising on public disillusionment with traditional lender (http://www.ft.com/cms/s/0/40d7a0dc-c5af-11df-ab48-00144feab49a.html). Another reason that attract me toward Tesco which used to be the UKs supermarket once is now expanding around more than 13 countries around the world (UK, USA, China, India, South Korea, Japan, Including other Asian countries and some European countries). Tesco is opening its store making suitable to where it open just like its open in Indian as cash and carry in joint venture with Tata group the Indian largest business group (http://www.tescoplc.com/plc/ir/rns/rnsitem?id=1218521062nRnsL1207Bt=popup_rns August 12, 2008). As we know USA is one of the challe nging market for UKs supermarket Tesco admitted that they go wrong on early market research and they may makes big changes in stores (The Sunday Times, February 22, 2009). As Tesco sets its three challenging long term targets towards community: to become a zero-carbon business by 2050; to reduce the carbon impact of the products in supply chain by 30% by 2010; and to help the customers halve their own carbon footprint by 2020; in which they are making good progress. Tesco opens the worlds first zero-carbon supermarket in Ramsey, Cambridgeshire in 2010 (http://www.tescoplc.com/plc/about_us/tesco_story/). Tesco is growing consistently outside UK as well. Tesco chairman David Reid told in annual report 2010 about its growth in South Korea and china Our acquisition in South Korea is performing well and delivering excellent results, weve opened our first three Tesco Lifespace shopping malls in China and we have made good progress building the infrastructure and developing new products f or Tesco Bank. This gives us idea that how Tesco is going to tackle in abroad. Tesco is one of the successful and adaptable business with different products in any area around the world. The diversity and complexity of the business attract me to analysis the business and financial position of Tesco. 1.3 Aims Objectives The aim of the report is to research and analysis the business and financial position of Tesco from the investor point of view. As we know investors are risks adverse so investors want to know risks and return of the investment to make decision. For this investors are always want to know not only the financial data but also the companys strategic plans, market in which they operate and the trend in the outside world. Therefore Ive made the comparison between same industry businesses which give reasonable recommendation the best investment decision. Therefore the report objectives are: To analyses past and current position of Tesco To compares 3 years performance with J Sainsbury To analyses the reason for diversified market To analyses the long term financial sustaintibility of both companies. To analyses the short term liquidity stability of both companies To analyses the market shares of both companies. To analyses the strategic plan and the factors which benefits and detriment the companies from external and internal using SWOT analysis. RATIO ANALYSIS The following financial key ratios analysis has been performed during the research project: which formulae are in the appendix: Growth Analysis: Sales revenue growth Profitability: Gross profit margin Net profit margin Asset activity ratio Return on capital employed Stability ratio Gearing ratio Interest cover ratio Liquidity ratio: Current ratio Quick ratio Investors Ratio: Earning /share Dividend /share Price / Earnings Ratio Efficiency Measures: Net asset turnover Return on total assets The some non-financial analysis of Tesco is also performed. Such as: SWOT analysis Strategic analysis 2. INFORMATION GATHERING 2.1 Sources Used and Reason Annual accounts of Tesco and Sainsbury: Financial statements is the main source that help me to calculate financial ratios and analysis the trend of past three years which help to find out the financial conditions, changes and improvements over the three years from 2007-2010. For comparison annual accounts of both companies data are used from their website. Annual report of Tesco and Sainsbury: Annual report of both companies is the source of financial statement which enables to calculate different financial ratios and analysis the trend of past three years for the period 2007-2010 which help us to understand the financial conditions trends, improvements and changes over periods. For comparison annual report of both companies are used which are available from their website.   Newspaper and Journal: Newspaper and Journal are significant sources which provide information regarding share price, market conditions, competitors activities, market surveys etc. The article provides shareholders the most recent analytical and other information so makes them easy to make investment decision. Financial newspapers just like Financial Times, The Sunday Times, Guardian, City AM, Metro, Evening Standard are helpful for the research. Text Book: The ACCAs text books F7 (Financial Reporting), F9 (Financial Management), P2 (Corporate Reporting), P3 (Business Analysis) and other business analysed text books are used to gather source of information which help to give ideas about ratio calculations and analyse the business performance using different method such as SWOT, strategic analysis. They also give theoretical knowledge to do financial and non-financial interpretation of the company.    Interim Report: The interim report provides the current news and seasonality information on business performance of the company. The reports are reviewed by the external auditor as the requirement of London Stock Exchange because they are unaudited report. They are easily available on companys website for download. ACCA Student account magazine: The monthly published Student Accountant by the ACCA which help us in understanding the knowledge, research and analysed the report through different articles published specially on Technical Section.   Oxford Brookes Universitys research and analysis project guidelines: The Oxford Brookes link on ACCA website is very useful through the research project which gives guidelines about writing report such as format, content, and many others. Store visit: During the research, store visit gives me ideas about the current and future plans of both companies to meet their objectives such as price cut by introducing buy one get one free or half price scheme. 2.2 Methods used to collect information Library visit: The library research involves collecting data through secondary resources such as newspapers, books, press reports etc. I also visited the City Business Library for collecting financial data of both companies over past three years. City Business Library provides online resource collection centre such as Financial Analysis Made Easy (FAME) which contain the information about listed companies in UK and Ireland. I used FAME to get the detail information over three years of Tesco Plc and J Sainsbury Plc. That provides information about annual account, key ratios, market share and trends over past years. Website research: The officially release data such as financial statement, recent business strategy, press releases and interim results of both companies were directly obtained through the companies websites i.e.  www.tescocorporate.com  and  www.j-sainsbury.co.uk  . For the independent data and information the following websites were helpful which provides relevant latest news and information about both companies. The websites are: www.bbc.co.uk www.londonstockexchange.com www.ft.com www.guardian.co.uk www.telegraph.co.uk www.heraldscotland.com www.timesonline.co.uk www.google.co.uk 2.3 Limitation to information: The ratio calculated is based on past data so do not give clear view about company future performance. The ratio calculation is based on companies annual account. Company prepares its account to show they are in good position (may use creative accounting), to attract more investors. So it may not be the best way to make investment decision. The secondary source of data does not provide the sufficient information about the company as a whole which just help for surface performance analysis. 3. ANALYSIS AND PRESENTATION Overview Tesco plc was established with the name Tesco by Jack Cohen in 1919 which became floating company in 1947 with share price of 25p.But now Tesco is one of the largest supermarkets based on national and international market. Tesco has a well-established and consistent strategy for growth, which has allowed it to strengthen its core UK business and drive expansion into new markets. The rationale for the strategy is to broaden the scope of the business to enable it to deliver strong sustainable long-term growth by following the customer into large expanding markets at home such as financial services, non-food and telecoms and new markets abroad, initially in Central Europe and USA , and now also in the Asian countries such as India, China (www.tesco.co.uk). J. Sainsbury is a leading UK based food retailer with interest in financial services. The group is listed on London stock exchange and its headquartered in Holborn, London. It has been the market leader for much of 20th century in UK and in 1995 Tesco took its place and in 2003 it was pushed to third place by Asda. We now analysis the performance of Tesco comparing with Sainsbury below: 3.1 GROWTH ANALYSIS 3.1.1 SALES REVENUE GROWTH Tesco Tescos revenue have been increasing 4.54% compare with year 2009 ( £54,327m) to year 2010 ( £56,910m). But in 2009 ( £54,326), the growth is 12% as compared to 2008 ( £47,298). This is due to the develop market in previous year in early 2007 help the Tesco to generate more revenue in 2009 and 2010. In 2010, the world suffers from the recession due to that the growth is not so much. The sales in international market are up by 8.8% to  £19.4 billion (2010) as compared to 17.69 billion (2009). The sale in core UK is up by 4.2% in 2010. (http://ar2010.tescoplc.com/~/media/Files/T/Tesco-Annual-Report-2009/Attachments/pdf/Full-Review.pdf). The increase in revenue was due to the increase in sales of healthy foods products and non-food products which grows almost twice as fast as the rest of the business. Tesco one of the largest online seller supermarket in the world generates  £136millions profit from online sales (http://www.nma.co.uk/news/tesco-reports-%C2%A3136m-profit-from- online-sales/3012439.article ). Sainsbury Sainsburys revenue have also been in increasing trend with  £19,964 m during 2010, an increase of 4% over 2009( £18,911) and increase of 11% over 2008( £17,837) which is overall less than Tescos revenue growth. This is due to tough competition between competitors like Tesco, ASDA, and Morrison and the global recession. 3.1.2 PROFITABILITY MEASURES (i) Gross profit margin Tesco The gross profit margin has been increasing gradually over three years from 2008-2010 from 7.67% to 8.1%. The gross profit in 2008 is  £3,630m which increase in 2009 to  £4,218m with (7.76%-7.67%) only 0.09% growths than previous year and in 2010 further increase to  £4,607m which is (8.1%-7.76%) is 0.34% increase than previous year. The increase was due to the high sales, good productivity and good control in the cost of sales expenses. Sainsbury The gross profit margin of Sainsbury has been decreased from 5.62% in 2008 to 5.48% in 2009 even there was little increase in sales due to high cost of sales expenses. In year 2010 the gross profit margin further decrease to 5.42% was due to there is no control over cost of sales expenses. Even the sales revenue seems little bit more they may be due to price inflation but not the increase in sales. The gross profit margin of both companies is mostly affected by global economic recession but Tesco is doing quite well. Sainsbury find itself in difficult probably due to high competition with other high street supermarket like Asda, Morrison, and Somerfield. (ii) Net Profit Margin Tesco For the three years period Tesco is doing very good net profit margin is as compared to that of Sainsbury but there is decrease of profit from 2008 to 2010. There is high decrease in profit margin in 2009 mainly due to administration expenses and absorption of initial operating loss in Tesco direct and also due to the unseasonal weather in summer. There is also some impact of establishing of US store. But later in 2010 its going through little increase in profit margin which shows Tesco is in recovery stage. Sainsbury The net profit margin of Sainsbury has decreased little bit to 2.46% in 2009 as compared to the 2008. But in the 2010 the net profit margin has been very good with the increase of (3.67%-2.46%) 1.21% which was mainly due to the increased finance income from the bank deposit and return from pension scheme and good control over expenses. 3.1.3 Assets activity ratio (i) Return on capital employed (ROCE) Tesco Tescos return on capital employed (ROCE) has better than Sainsbury over three years. But while looking at Tesco only there is huge decreased of ROCE over three years from 14.08% in 2008 to 10.58% in 2010. That is due to the investment in new stores and new market development in order to gain. In 2009 to 2010 the ROCE is slightly increased which seems Tesco will again increased its performance. Sainsbury Sainsburys ROCE has been increased in the three years period time from 6.03% in 2008 to 9.09% in 2010. The increased was mainly due to effective cost control and also due to the increase net profit margin. 3.1.4. Stability Ratios (i) Gearing Ratio Gearing ratio measures the stability of the company for the long term. In simple, its the measure of long term debt as a percentage of equity. The company is more risky as the gearing increases because highly geared company have to pay the high interest on loans and also they dont have the ability to borrow more for any investment opportunity. Tesco Tescos gearing ratio was 149.14% in 2009 which is much more than 2008 which is only 87.06% which was due to the increased in borrowing for investment in international stores. But in 2010 Tesco has repaid its some of its debt so there is decrease in gearing. Sainsbury Sainsburys gearing ratio was also increased to 66.09% in 2009 from 44.54% in 2008 due to increased in debt and also decreased in shareholder fund. But in 2010 Sainsburys gearing slightly decrease to 63.81% because of repayment of its some debts and constant growth in shareholder fund. (ii) Interest Cover Ratio (ICR) The interest cover ratio calculates the number of times the profit before interest and tax can cover the interest (finance) costs. The company with higher interest cover is better, because there is lower financial risk. Tesco The interest cover ratio of Tesco is better than Sainsbury but while looking at its own previous year Tesco interest cover ratio is decreasing from 12.21times in 2008 to 6.49 times in 2010. This is due to high borrowing for investment plan and low profit increase. Tesco is still in better position to cover its finance cost and will be in best position when the todays investment starts to generate profit. Sainsbury Sainsbury is doing well in interest cover even there was little decrease in 2009 to 4.15 time from 4.63 in 2008 because there is decrease in profit. But in 2010 Sainsbury interest cover ratio increased 1.80 times than 2009 to 5.95 times because of increased in profit and also decrease in borrowing interest. 3.1.5 Liquidity Ratios (i) Current Ratio The current ratio gives an indication of company ability to meet its short term obligation with its working capital and continue trading. The higher the current ratio, the better the company position because there is sufficient liquid to cope with short term financial obligation. The standard current ratio should be 2:1.This rule does not fit for supermarket because as the supermarket do not want to hold high stock to avoid wastage and holding cost. Secondly there are negligible trade debtor but high trade creditors to whom they delay payment. Tesco Tescos current ratio has been increasing from 0.61 times in 2008 to 0.78 times in 2009 because of increase in stock level. But the current ratio in2010 is decrease as compared to 2009 to 0.73 times because of increase in trade creditors, short term loans, overdraft etc. The current ratio of Tesco is far below the standard rate of 2:1 because supermarket like Tesco does not want to hold more stock and nil debtors. Sainsbury Sainsbury current ratio was decrease in 2009 to 0.54 times from 0.66 times in 2008 because of low stock level and increase in short term loans. But Sainsbury again return to 0.66 times current ratio in 2010 because of increase in stock level and repayment of short term loans. (ii) Quick Ratio Quick ratio is also called acid ratio because it eliminate the stocks from the current asset and calculate the companys ability to pay off short term liability with its liquid assets. Ideally the standard ratio should be 1:1. Tesco Tescos quick ratio is increase in 2009 to 0.63 times from 0.38 times in 2008. And again fall to 0.56 times in 2010. This is much lower than average. This shows that Tesco cant able to cover its current liability with its current asset without stocks. But the nature of current asset and current liabilities in Tescos does not seem to have any liquidity problems. Sainsbury Sainsburys quick ratio is almost same over three years with slightly decrease in 2009 to 0.3 times from 0.4 times in 2008. But in 2010 again return to 0.4 times which is much lower than average rate. The consistency of ratios shows that there is no liquidity problems in Sainsbury. 3.1.6. Investor Ratios (i) Basic Earnings per Share (EPS) EPS ratio indicates the returns per shares from the investors point. Tesco Tescos EPS has been increasing gradually over three years from 26.95p in 2008 to 27.14p in 2009 and 29.33p in 2010. This is because of high profit. Sainsbury The EPS of Sainsbury is not seems so smooth as there is decrease in 2009 to 16.6p from 19.1 in 2008. But in 2010 there is nearly double increase to 32.1p. This shows the volatility in the relation to the shareholders. (ii) Dividend per Share (DPS) Tesco Tescos dividend per share has been increased to from 10.90p per share in 2008 to 11.96p in 2009 and 13.5p in 2010 which means Tesco is doing well to its shareholders. The main reason behind the increase in dividend per share is due to increase in net profit mainly from the national and international market sales growth. Sainsbury Sainsbury is also doing quite well in dividend per share which has been increase from 12.0p per share in 2008 to 13.2p in 2009 and 14.2p per share in 2010. From investor point of view Sainsbury is doing better than Tesco in dividend per share. As we know dividend per share were made internal from the company so they may contain false information to attract investors thats why investor should not concern on it. iii) Share price 1source: tescoplc.com Figure 1 share price movement of Tesco and Sainsbury Tesco share price is better than its rival Sainsbury over 3 years times. As we see from the figure Tesco share price on 26/2/2008 was 409.25p where as Sainsbury was only 368.50p on the same day. But the next year the both companies share price decrease due to the economy fall. In 27/2/2009 Tesco share price was only 338.20p where as Sainsbury has 321.75p. In 26/2/2010 Tesco is doing better in share price with increase to 422.40p with further increase in later in the year but the share price of Sainsbury fall down to 322.30p on the same day. Overall analysis As we see the trend of movement of share price of both companies it in decreasing trend with fluctuating economic condition. The decreasing trend is mostly due to the economic recession all over the world. From the starting of 2009, while there was a little bit start of recovery in world economy recession the share price of both companies are in increasing trend till now. But comparing the two companies it seems Tesco share price increase more rapidly as compare to Sainsbury because of the good performance of Tesco and the market strategy. iv) Price / Earnings (P/E) Ratio Price / Earnings ratio shows how much the investors are willing to pay per pound of earnings for a share. The high P/E indicates investors are expecting higher earnings growth in future. . Tesco The P/E has fall from 15.18 times in 2008 to 12.46 times in 2009 because of economic crisis but due to recovery in economy and good performance of Tesco, the price earnings ratio again goes up to 14.40 times in 2010. As compared to Sainsbury Tesco performance on last two years wasnot so good but in 2010 Tesco is doing quite well than Sainsbury. Sainsbury The P/E ratio of Sainsbury has risen a little bit in 2009 to 19.38 times as compare to 19.29 times in 2008. But in 2010 the P/E ratio fall dramatically to 10.40 times even there is going economy recovery in the world. The fall in P/E ratio seems not good for the company from the investor point of view as investor always willing higher earnings. 3.1.7 EFFICIENCY MEASURE i) Net asset turnover (NAT) The net asset turnover ratio represents the amount of revenue generated by the company as a result of its asset on hand. It measures how efficiently the company is operating. Tesco The net asset turnover of Tesco is decreasing over three years period from 2.38 times in 2008 to 1.94 times in 2009 due to massive investment in assets. Then there is a little bit decrease in net asset to 1.90 times which means the efficiency of asset is not quite good enough to generate the cash. Sainsbury Sainsburys NAT was quite good as compare to Tesco. There was also slightly increase in NAT from 2.54 times in 2008 to 2.66 times in 2009. But in 2010 again decrease to 2.48 times. The decrease in NAT may be due to saving investment in asset to cope with future economy crisis. ii) Return on total assets This ratio measures  a companys earnings before interest and taxes (EBIT) against  its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid. Tesco Return on total asset in Tesco has decreased to 6.49 times in 2009 from 9.29 times in 2008 because of more investment in fixed and current asset. But this ratio was increase to 6.90 times in 2010. Sainsbury Sainsbury Return on total asset was decrease in 2009 to 4.64 times from 4.98 times in 2008. But in 2010 its increase significantly to 6.75 times which seem far better as compare to previous year which is mainly due to increase in earning. 3.2. NON FINANCIAL ANALYSIS (i)SWOT Analysis: SWOT Analysis is the simplest of positioning company internal analysis by strength and weakness also external analysis by opportunities and threats. After the analysis the company should build the strength, fix their weakness as they are internal factor and they should exploit opportunities and minimize threats to be successful. As we know opportunities and strength should match, then only the company able to exploit their opportunities. We are now looking at Tescos SWOT analysis: Strengths: Diversified Business: Tesco which used to be the food super store now spreading in other product market sectors such as clothing, mobile, petrol, finance etc makes it easy to cope with any kind of risks. This is strength because the risk of one market sector fails to gain sufficient revenue is spread among other sector to cover that loss. Global market: Tesco operates in more than 12 countries apart from UK with strong performance and good reputation which means Tesco should not depend on any specific territory to success. Brand name: Tesco brand name with slogan Every little help enables to launch their own different product with best quality that is in affordable price. The brand helps Tesco to attract new customer as well as keep the existing customer. Online sales: Tesco is the supermarket which is doing very good in online sales with tesco.com which avoids the investment in physical stores and for customer it avoids to visit crowded store and the fear of unavailability of product in store. Club card: Tesco offer its customer their own club card so they hold their customer to their store and also record the customers information about their most shopping and make that product availability. Stores: Tesco which got strong market share more than 31% is opening its stores looking the need of that area. Such as in business centre it open small Tesco Express and in residential area there are Tesco Extra, Metro, Superstore etc. So the competitors are unable to beat Tesco. Corporate social Responsibility: Tesco is not only making money itself also help the community through different charity programme such as Cancer Research UKs race in 2009. It also helps to protect the environment through encouraging customer to reduce use of plastic bag and also going to be zero carbon business by 2050. WEAKNESS Too much diversification: Tesco is diversifying in different market sector which makes it difficult to focus on particular sector. So Customer may not get the quality product or service which harms their reputation and may loss their potential customer. Lack of global Business knowledge: Tesco entered to global market without proper studies over there which makes them hard to face the competition such as in first year they face in US store Fresh and Easy. OPPORTUNITY. Expand on non-food market: Tesco which used to supply only food product is now has lots of opportunity in non-food product such as clothing, electronic, finance etc. Tesco has opportunity of generating lots of revenue through good customer service, smooth supply of non-food product. Knowledge utilization: Tesco which is now one of the international giant supermarket, there are lots of opportunities of using its global business knowledge and experience in expanding its global market in more countries and place which help them to generate more revenue. Strategic alliance: Tesco which is providing lots of service in one roof has opportunity to expand through alliance. So that the specialization company helps to provide better quality service and assist in promoting sales. THREAT Weakening Economy: Economic condition play the vital role in the performance of the company. It not only hits the one sector but also damage the whole industries. In recent year due to global recession every company facing difficult to survive due to decrease in purchasing power of customer. So it is necessary for Tesco to make certain strategy to tackle that problems. Competitors: There is always the biggest threat of existing and new competitors as the market is so attractive. The existing competitor such as Sainsbury, Asda, Morrison etc increasing their market shares so Tesco should always look for new strategies to cope that threats. Global management: Tesco is operating more than 12 countries which make them harder to manage the company because of different culture and rules. There is also different economic condition so need the certain knowledge and experience to cope with that threats. (ii) Strategic Analysis Tesco is setting its strategy to motivate towards the progress of the company by focusing on its customer as well as society. Before there were only four strategies which only focus on company performance but now they add one more strategy towards the community which is also on their corporate social responsibility. So now Tescos strategies can be analyzed under five main heading: a)To be successful in international retailer: Tesco is operating more than 12 countries and the experience of more than ten years in overseas; Tesco is making some of its strategy by the knowledge gain over there such as: Be flexible Act local Maintain focus Use multi-format Develop capability and Build brand. b) To grow core at UK business: Tesco group business is significant within the UK with over 2,200 stores and more than 70% of group profit from UK business. Tesco is dominating UK market share with approximately double than its rival. Tesco has four main type of store to fulfill the need of customer such as Express, Metro, Superstore, and Extra. They also in trail of new format of