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Introduction
According to Sarasvathy (2008) there are two distinct strategies of approaching business ventures. Sarasvathy identified that causation is a strategy that is strictly reliant on a plan set initially. She described another strategy referred to as effectuation.
Effectuation model describes the situation in which a business changes in accordance to emerging issues. This model is applied highly by entrepreneurs when venturing into businesses. This essay will focus on evaluating the suggestions of commentators about entrepreneurs and the models.
Academic concepts
There are various conceptual factors that are applied to facilitate appreciation of businesses. The factors that are listed below represent the ideas enabling concepts of business ideas to flourish.
Effectiveness
This is the degree to which a problem is solved (Needham & Dransfield 1994). For a business plan to work precisely, it should focus on the extents of marking and determining the prevailing solution. When the prevailing solutions, directive and proper guideline are enacted they go to fit the issue at hand. This presents a good atmosphere for business development and proper progress.
An effective business model facilitates the initiation of proper business strategies that are potentially productive with time. It is vital to note that descriptive analysis converge a wide range of ideas into a comprehensive statement targeted to fulfill the ultimate business goal (McKelvey 1996). For these reasons, entrepreneurs prefer this dynamic model that maximizes profits according to situations.
Assessment
This involves checking the validity or performance of an influenced decision from time to time (Steingold 2004). It ensures minimal mistakes are made on decisions made concerning the new ventures. Assessments display the nature of the prevailing factors around a business.
These assessments help to mitigate the factors and modify the business interactions within the environment. In this way, business manages to exploit the surrounding factors to its advantage. Assessments are, therefore, vital in mitigating the direction of the business and ensuring that proper measures are considered amicably.
Accountability
The decisions made concerning the new venture should be realistic and reliable for its outcome (Udell 1991). In most cases, there are factors that must be considered through all means. These include being accountable to the activities that a business performs.
For instance, if there are some influences concerning pollution of the environment, there must be responsive factors incorporated to fit into this situation. Probably, the business must take responsibility by hiring people to take care on this issue. The entrepreneurs prefer effectuation due to the ability to change strategies in accordance to situations. For instance, repairs and urgent issues are addressed amicably.
Business Models
Merchant
These are wholesalers and retailers of goods who sell their goods via listing prices or carrying out an auction. They must be present and available at the prevailing business plans (Forsyth 2002). They, also, set up some systems that seek to put their customers on a competition bid.
As a result, they have a chance of selling the products at prices that are suggested by the customers. This ensures that the customers do not lack confidence with the company. Instead, they understand that they have a self-regulating system.
Manufacturer
They produce goods and avail them to their customers directly. This suppresses the chain of distribution. Consequently, it is vital of consider the place from the manufacturer. This is because consumers get access to the products at cheap prices that a business venture cannot manage. Therefore, entrepreneurs can learn this and take charge of effectuation to implement alternative strategies.
The community
This model is based on customer loyalty to the buyer. Revenue is based on the level of the advertisement, subscription on goods sale or even voluntary contributions. In this light, the manufacturer supports the community as a way of giving back.
In this case, the company focuses on the value maximization rather than the profit maximization. They support the community in cases of sponsoring education of children, and sponsoring events among others. As a result, the customers remain loyal to them and avoid wavering on other companies.
Utility
This is the usefulness of a good or service to a buyer. Consequently, its acquisition is based on the usability of the commodity to the consumer (Wren & Greenwood 1998). In this light, the manufacturer ensures that the quality of their goods and services is satisfactory.
This ensures that the products are usable and meets the needs of the customers. It discourages manufacturing products according to the company’s perspective. On the other hand, it encourages manufacturing products according to the perspective of the customer.
Infomediary
In this case, the business ventures involve linking buyers to the best products by looking for the best producers of the products needed (Bragg & Bragg 2005). Therefore, the customer understands the market well and gets the best commodities to their preference at the time. It seeks to equip the customers with necessary information. This allows them to make informed decisions when buying products.
Advertising
This kind of business is joined to broadcasting whereby commodities are advertised on the television and on the internet (Arkebauer & Miller 1999).
This captures market of a product that may be new in a market or substitute goods that are thriving in a very competitive market. It ensures that the company succumbs to the competition that is raised by other company. In fact, advertisements are the most crucial component of any successful business.
Affiliate
This is a business model that is common in the internet (Forsyth 2002). It does volume marketing of products where people are exposed to advertisements. A good example is the goggle affiliate marketing. This program seeks to allow marketing through personal sites. As a result, goggle acquires a wide network of customers.
Brokerage
This form of business links between buyers to sellers (Bangs 1996). They carry out transactions in a qualified manner but are liable to the immediate sellers. It enables the customers to attain knowledge about the market position and the products that are in the market. It ensures that they do not miss goods and services owing to their ignorance.
Leverage
Some people venture into businesses through profit making (Appleby 1994). Leverage is a financial activity that arises after multiplying gains by landing out its fixed assets. They do not concentrate on empowering other players in their business. In this case, they deviate from profit maximization and adopt the concept of profit maximization.
Leverage
This business comes up with new inventions into the market. For example, new phone makes and designs of software are presentable leverage. Innovations ensure that the company will maintain their customers in the business. For example, software industries ensure that updates are developed after some time. It ensures that there is something to get from the developers at all times.
Examples
The following paragraphs present entrepreneurial businesses that have applied effectuation to their prosperity.
Amazon
This business levers out its assets through online books. To enable people air suggestions and make opinions concerning books. It, also, offers e-commerce services to the companies linked to it in different dimensions like their distributors. It, also, brings together buyers and sellers.
Apple solutions
Apple has brought a vast change in the industry of computers, music and the world of mobile phones. It has, also, come up with a number of peripherals. Media and software supports effectiveness of their products. It is an example of an innovative business. It came up as an innovative business and has ventured into brokerage.
Etsy
This is an online business that markets handmade products to people all over the world. They make the product easy to use and ensure that they can earn from the devices. In this case, the customers can correct data and upload it online hence making money for their use.
Cisco
This is a business that deals with networking. It offers internet solutions concerning business and other matters like the environment. It is a publication and merchandise business. In this business, they have created a network of IT experts around the world. They have setup a program that seeks to capture the young experts from school into their company. This ensures that their staff is vigorous, vibrant and competent.
McDonald’s
It is a business situated in the United States of America that franchises businesses in 119 other countries with large number of employees. The McDonald Company offers fast foods in the United States of America. It has made a network that helps in distributing their risks.
The distribution of risk ensures that they do not go down in case a single country fails their business. They have setup their headquarters in USA while the other departments are distributed over the 119 countries. In addition, they have the loyalty programs that assist customers.
References
Appleby, R 1994, Modern business administration, Pitman, London.
Arkebauer, J & Miller, J 1999, Leading edge business planning for entrepreneurs, Dearborn Financial Pub, Chicago.
Bangs, D 1996, Smart steps to smart choices: testing your business idea, Upstart Pub Co, Chicago.
Bragg, A & Bragg M 2005, Developing new business ideas: a step-by-step guide to creating new business ideas worth backing, Financial Times, Harlow.
Forsyth, P 2002, Business planning, Capstone Pub, Oxford.
McKelvey, M 1996 Evolutionary innovations: the business of biotechnology, Oxford University Press, Oxford.
Needham, D & Dransfield, R 1994 Business studies (2nd ed.), Stanley Thornes, Cheltenham.
Sarasvathy, S 2008, Effectuation: Elements of Entrepreneurial Expertise, Edward Elgar Publishing Limited, Cheltenham.
Steingold, F 2004, Legal forms for starting & running a small business, Nolo, Berkeley.
Udell, G 1991, Ideas, inventions, innovations, Small Business Administration, Washington.
Wren, D & Greenwood, R 1998, Management innovators: the people and ideas that have shaped modern business, Oxford University Press, New York.
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