ENTREPRENEURSHIP MGM 4183 TEST 2 – GROUP ASSIGNMENT
By Ali Hasan Sheikh (ES02029) and Kawkab Shakeel (ES02051)
International entrepreneurship is the process of an entrepreneur conducting business activity across the national boundaries. It may consist of exporting, licensing, opening sales office in another country etc. International entrepreneurship is defined as development of international new ventures or start ups that from their inception engage in international business, thus viewing their operation domain as international from the initial stages of international operations.
Characteristics of International Entrepreneurs:
1. Passion and Motivation:
There are many traits that make an international entrepreneur successful, one of them are passion and motivation. A successful entrepreneur is always passionate and motivated about his business as he always keeps the needs of the business above all other needs.
Is there something you can work on over and over again without getting bored?
Is there something that keeps you awake at night because you haven’t finished it yet?
Is there something you have built and want to continue to improve upon?
Is there something you enjoy so much you want to continue doing it for the rest of your life?
Success is a function of passion and determination.
2. Willing to take risks
Entrepreneurs are risk takers, as they are always willing to risk their time, money and other valuables. But not all risk takers become successful international entrepreneurs. What differentiates a successful entrepreneur from the rest in terms of risk? When evaluating risk, a successful entrepreneur will ask himself, “Is the investment or risk worth the time and money?” And, “What will I do if I don’t get the expected return from the risk invested”
3. Self-belief, Hard Work and Disciplined Dedication
Entrepreneurs believe in themselves and are always confident and dedicated towards their goal and project. They work really hard day and night to defy the odds for becoming successful and gaining more success than other entrepreneurs.
4. Flexible and can adapt to situations easily
Being passionate and dedicated your own business is important, but being inflexible about the market needs and the current business requirements will lead to failure. Remember, an enterprise is not simply about doing what you believe is good, but also making a successful business out of it. Successful entrepreneurs are always optimistic about their business and always willing to customize their way of running the business to be in line with the international marketing standards.
5. Product and Market Knowledge
Entrepreneurs know their product inside and out. They also know the market. Most become successful because they create something that didn’t existed or sometimes they improve an existing product after experiencing some drawbacks with the way it worked. Remaining unaware of changing market needs, competitor moves and other external factors can cause even great products to fail.
6. Strong Money Management
It takes time for any business venture to become profitable and successful. Till then their capital is limited as such the business needs are to be utilized wisely. Successful entrepreneurs plan for present and future financial obligations and set aside some amount of money to be used in case of any emergency. Even after setting up the reserve amount of money, as successful entrepreneur always has an eye on the cash flow of the business to ensure that the business doesn’t runs out of cash as it is the most important aspect of any business enterprise..
7. Effective Planning (Not Over-Planning) Skills
Entrepreneurship is about building a business from scratch while managing limited resources (including time, money and personal relationships), which requires planning. However, trying to plan for everything and having a ready solution in place for all possible issues may prevent you from ever taking the first step. International entrepreneurs have a proper business plan in mind, but remain capable of dealing with unforeseen possibilities.
8. The Right Connections
Successful entrepreneurs reach out to mentors with more experience and extensive networks to seek valuable advice about their business. If they don’t have the necessary technical or marketing skills or connections with the right people, they find someone who does and delegate these tasks so they can focus on growing the business.
9. Not give up
Not every attempt will result in success. The failure rate of business ventures is very high. Sometimes, the best solution is to stop the current production if it’s no gaining success and try something new instead of continuing to dump money into a failing business. Many famous entrepreneurs who are known internationally weren’t successful the first time around, but they knew when to cut their losses and alter their business.
10. Ability to Question Themselves – But Not Too Much
You may ask yourself, am I an entrepreneur? The very question may make you doubt the answer. Even if you don’t have the qualities of Steve Jobs, if you have the courage to ask yourself intimidating questions, for example, “Can I do this or that? Do I want to do this?” Then you’ll see do you have the stuff to be an entrepreneur.
Do you have what it takes to be an entrepreneur? Instead of worrying about fitting the image, check in with your gut. Is it on board?
Global, regional and international entrepreneurship
Entrepreneurship may be seen as a key factor to improving society and economies in much of the developed world. Recent research initiatives support growing enthusiasm around entrepreneurship internationally. For example, a 2010 report published by the Kauffman Foundation showed that new startups are responsible for creating a job. And more recently, the 2015-16 Global Entrepreneurial Monitor report, which tracks characteristics, rates and societal attitudes around entrepreneurship, found that the positive perceptions around entrepreneurial careers and opportunities were highest in “factor-driven economies”, defined by the World Economic Forum as economies dominated by businesses with a heavy reliance on unskilled labor and natural resources. Basically, economies with the highest potential for growth recognize the importance of entrepreneurship towards their future development and are ready to capitalize on any entrepreneurial opportunities.
With the rise of entrepreneurship-education programs, literary resources and other learning opportunities, gaining access to entrepreneurship training has never been easier. This access to information is very important to the growth of entrepreneurial economic systems globally. But being successful as a global entrepreneur means going beyond and thinking of out of the box eco- friendly practices, learning how to adopt ideas to the specific economic system, and developing an entrepreneurial mindset that will serve as an asset in different situations arising in the economy.
In addition, leaders in the field of international entrepreneurship believe that thinking globally is becoming increasingly important for all entrepreneurs. A Stanford graduate who has worked as an entrepreneur in multiple continents said “Remember that entrepreneurship is a way of life, and being globally minded is no longer a choice if you want to be a successful entrepreneur,” This Stanford graduate taught entrepreneurship on multiple continents, tells he has seen equal entrepreneurial potential in students across the board. It’s when students leave their academic environments and start working in the “real world” and get to know about the cultural norms of each region that potential comes into conformity.
Being aware of the fact that entrepreneurs around the world share many personality traits including a high level of technical or entrepreneurial talent and eagerness to create something amazing. Technical entrepreneurs can be good international entrepreneurs as they have the ability to perform well regionally as well as globally. Their skills are diversified so it is easy for them to adapt to new situations in short span of time. Furthermore, Regional entrepreneurship is a growing field within international entrepreneurship. A famous quote says “entrepreneurship is primarily a regional event.” Regional entrepreneurship covers all issues related to the regional causes and regional impacts of entrepreneurial activities and government policies to support entrepreneurial activities. We might gain a better understanding about possible mechanisms of how regional characteristics impact entrepreneurial behavior by combining aggregated data at the regional level with individual-level data. There are small but growing number of studies employing this approach, with results pointing to the relevance of regional factors in explaining individuals’ entrepreneurial attitudes, entrepreneurial intentions and engagement in new venture creation. In particular, research on the regional determinants of entrepreneurial attitudes suggests that regional characteristics can influence individual-level factors such as inner skills to found a new venture or fear of failure preventing entrepreneurial activity (e.g., Bergmann 2005). Continuing this way of research to enhance our understanding of how the region operates and given the various attempts to support entrepreneurship by government programs in all countries and at all other levels, it can also provide knowledge for policy interventions.
The relationship between regional characteristics and individual and global entrepreneurship with a special focus on individual opportunity perception as an intervening variable. Integrating the individual-level variable opportunity perception into a conceptual model of regional entrepreneurship requires distinguishing between direct and indirect effects of the regional environment. Regarding the direct effects we investigate the relationship between regional characteristics and individual entrepreneurship at a global level. This is in our case captured by business start-up intentions and activity representing early stages of the entrepreneurial process. Hence the three main regional characteristics are: knowledge creation, economic conditions and entrepreneurial culture. The indirect effects of regional characteristics on individual entrepreneurship are very effective. In order to focus on the down process of the regional characteristics towards the individual level, people in America follow Sternberg and Rocha (2007), who established a model that focuses on the individual perception of regional characteristics. Individual entrepreneurship is then effected by this perception.. In this way regional characteristics can have an indirect effect on entrepreneurship. Based on other cases from multiple cases, one can say that how regional knowledge economic conditions, and an entrepreneurial culture affect individual opportunity perception, which then affects individual start-up business intentions and other economic activity at global level.
Barriers and challenges in International Business
There are many challenges faced by international businesses which hinder them to perform effectively in the international market. The main challenges faced by an international business are:
1- International company structure
The aim of international businesses is to be competitive globally, so the must have a proper team plan. One of the most basic thing to focus is the structure of the organization and its location and team planning. For example, will your company be run from one central headquarters? Or will you have offices and representatives on the ground in main markets internationally? If so, how will these teams be organized, what autonomy wills they have, and how will they coordinate working across different countries with different zones? If not, the company will consider hiring local market experts who understand the culture of the target markets, but will work centrally? Coca-Cola is one of the best examples of effective multinational business structure. The company is organized into departmentalized groups, each overseen by a President. The central Presidents manage managers of smaller, country-based or regional subdivisions. Despite its diverse global structure, the Coca-Cola brand and product is controlled centrally and consistent around the world. While Coca-Cola is a big international brand, the structure of the company and the number, nationality, and level of experience of the team created will vary depending on the product, size of the company and industry it is in.
2- Rates of the currency
In international business where we have problems like payment methods and price setting, another major consideration is currency rate fluctuation. The main strategy to start an international business must be monitoring exchange rates. Major fluctuations in the exchange rates can seriously affect the balance between expenses tha are made in the business and profit. For instance, if the suppliers and the production costs of your company are paid in U.S. dollars, but selling in markets takes place with a weaker or unpredictable currency, it can cause your company to end up with a much smaller margin or can even cause you great loss. In order to avoid these large fluctuations in currency, what you can do is pay the suppliers and the production costs in the same currency as the one you’re selling in. This may mean moving towards more local production where possible in order to better manage your external activities and sales revenue. The other way of reducing the risk of unpredictable currency rates can be setting up a forward contract and agreeing a price in advance for future sales. This basically means missing out on greater profit and sales, if rates shift in your favor. However, it can protect the sales from the risk presented by unstable currency.
3- International laws, rules and regulations
Along with getting your structure of the company in place, gaining an in-depth understanding of the local laws and regulations governing your target markets is important. From implementing taxes through trading laws, navigating legal requirements is a basic function for any successful international business. Being eligible to trade is a significant consideration, as are potential tariffs and the legal costs included with entering new markets. Other than keeping up with official laws, engaging in international business often requires following other unwritten cultural guidelines. This can prove especially challenging in emerging markets with not well defined regulations or potential corruption. In response, companies doing business in the United States must abide by the Foreign Corrupt Practices Act, which focuses at eliminating bribery and unethical practices in international business. An important rule is to be aware of engaging in any questionable activities, which might be legal but could have future reputational reasons.
4- Political Risks
One of the basic risks for international business is political uncertainty and instability. Countries and emerging markets that may offer some opportunities for expanding global businesses may also give challenges, which more established markets do not. Before considering expansion into a new or unknown market, a risk assessment of the economic and political landscape is important. Issues such as not well-defined or unstable policies and corrupt practices can be highly problematic in emerging markets. Changes in governments can bring changes in policy, regulations, and interest rates that can prove damaging to foreign business and investment. A growing trend towards economic nationalism also makes the current global political environment potentially hostile towards international businesses. For instance, companies like Facebook are banned in China, due to government regulation over internet content. Monitoring political developments and planning accordingly can reduce political risks of doing business abroad.
5- Global pricing strategy
Setting the price for your products and services can present challenges when doing business overseas and should be another major consideration of your strategy. You must consider costs to remain competitive in the market, while still making sure you are going in a profit. Researching the prices of direct, local-market competitors can give you an advantage however, it remains vital to ensure the math still works in your favor. For example, the cost of production and shipping, labor, marketing, and distribution, as well as your margin, must be a taken into account for your business to be viable. Pricing can also come down to how you choose to position your brand or should the cost of your product reflect luxury status? Or will low prices help you to penetrate a new market? Swedish furniture giant Ikea, known in Europe for its low-cost pricing, struggled initially in China due to local competitor costs of labor and production being much cheaper. By relocating production for the Chinese market and using more locally sourced materials, the company was able to successfully cut prices to better reflect its brand and increase sales among target consumers.
6- Communication barriers and cultural differences
Good communication is at the heart of effective international business strategy. However, communicating across cultures can be a very difficult challenge. Further developing cross-cultural competency and communication skills are a core focus inside and outside of the classroom. Effective communication with colleagues, clients, and customers abroad is essential for success in international business. And it’s often more than just a language barrier which needs to be taken into account and thinking about nonverbal communication can make or break business deals too. Doing the research and knowing how different cultural values and norms such as shaking hands can and should influence the way people communicate in a professional context. Being aware of acceptable business etiquette globally, and how things like religious and cultural traditions can influence this, will help a person to better navigate potential communication problems in international business.
7- Universal Payment methods
The increase in number of international e-commerce websites has made selling goods overseas easier and more affordable for businesses and consumers. However, payment methods that are commonly accepted in your home market might be not available internationally. Determining acceptable payment methods and ensuring secure processing must be the main focus for businesses who seeks to trade internationally. Accepting well-known global payment methods through companies like Worldpay, as well as accepting local payment methods, such as JCB in Asia, can be a good option for large international businesses. Accepting wire transfers, PayPal payments, and Bitcoin, are other possibilities, with Bitcoin users are benefiting from no bank or credit card transaction fees. Despite the risk of fluctuating value, the lack of fees is one of the reasons a number of online companies, including the Apple App Store and Expedia accept Bitcoin.
8- Environmental issues
The environmental risks and effects of climate change are becoming better understood, sustainability is high on the agenda of many major global corporations. Recent international legislations and proposals, such as the UN’s Sustainable Development Goals, have put environmental issues at the forefront of international business development. The Ash ridge Centre for Business and Sustainability researches innovative ways that organizations can develop and implement more environmentally sustainable business models. On a practical level, if you’re considering expanding your business overseas, it’s important to be aware of the country-specific environmental regulations and issues associated with your industry. Some key considerations include how your production methods might impact the local environment through waste and pollution.
Hence these were all the main challenges that are face by mostly all international businesses. Such businesses are working really hard to overcome these problems and work at a stable level. In my opinion it is the responsibility of such businesses to deal in the most customer friendly manner as such they have to face all these challenges critically as an international business encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across national boundaries.