Identifying and Recognizing Opportunities; To be successful entrepreneurs, we need to be continually innovating and looking for opportunities to grow our startups. When you can recognize opportunity, you know how to identify promising changes unfolding around you, and you act to take advantage of them. But how do you find new opportunities to take your startup to new markets and growth levels? Essentially, entrepreneurs recognize an opportunity and turn it into a successful business.
Here are explain; How to do Identifying and Recognizing Opportunities for a Successful Business?
An opportunity is a favorable set of circumstances that creates a need for a new product, service, or business. Most entrepreneurial ventures start in one of two ways. Also, Some ventures externally stimulate. In this instance, an entrepreneur decides to launch a firm, searches for and recognizes an opportunity, and then starts a business, as Jeff Bezos did when he created Amazon.com. In 1994, Bezos quit his lucrative job at a New York City investment firm and headed for Seattle with a plan to find an attractive opportunity and launch an e-commerce company.
Other firms are internally stimulated, like Bench Prep. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it. Regardless of which of these two ways an entrepreneur starts a new business, opportunities are tough to spot.
Identifying a product, service, or business opportunity that isn’t merely a different version of something already available is difficult. A common mistake entrepreneurs make in the opportunity recognition process is picking a currently available product or service that they like or are passionate about and then trying to build a business around a slightly better version of it. Although this approach seems sensible, such is usually not the case.
The key to opportunity recognition is to identify a product or service that people need and are willing to buy, not one that an entrepreneur wants to make and sell.
What is An Opportunity?
Opportunity Defined; An opportunity is a favorable set of circumstances that creates the need for a new product, service, or business idea.
Difference between an opportunity and an idea; An idea, as we defined it, is “Something imagined or pictured in the mind”. Also, The difference is that an idea may or may not represent an opportunity.
Most entrepreneurial firms start in one of two ways; Some firms internally stimulate. An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business. Other firms externally stimulate. Also, An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it.
An opportunity has four essential qualities:
It is;
1) attractive,
2) durable,
3) timely, and
4) anchored in a product, service, or business that creates or adds value for its buyer or end-user.
For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. Also, The term window of opportunity is a metaphor describing the period in which a firm can realistically enter a new market. You may understand identifying and recognizing opportunities, once the market for a new product establishes, its window of opportunity opens. As the market grows, firms enter and try to establish a profitable position. At some point, the market matures, and the window of opportunity closes.
This is the case with Internet search engines. Yahoo!, the first search engine, appeared in 1995, and the market grew quickly, with the addition of Lycos, Excite, AltaVista, and others. Google entered the market in 1998, sporting advanced search technology. Since then, the search engine market has matured, and the window of opportunity is less prominent. Today, it would be very difficult for a new start-up search engine firm to be successful unless it offered compelling advantages over already established competitors or targeted a niche market in an exemplary manner.
Bing, Microsoft’s search engine, is enjoying success with approximately 27 percent market share (compared to 68 percent for Google), but only after Microsoft has exerted an enormous amount of effort in head-to-head competition with Google.
It is important to understand that there is a difference between an opportunity and an idea. An idea is a thought, an impression, or a notion. Also, An idea may or may not meet the criteria of an opportunity. This is a critical point because many entrepreneurial ventures fail not because the entrepreneurs that launched them didn’t work hard, but rather because there was no real opportunity, to begin with. Before getting excited about a business idea, it is crucial to understand whether the idea fills a need and meets the criteria for an opportunity.
Also, Now let’s look at the three approaches entrepreneurs can use to identify an opportunity. Once you understand the importance of each approach, you’ll be much more likely to look for opportunities and ideas that fit each profile.
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Entrepreneurship theories and research remain important to the development of the entrepreneurship field. This paper examines six entrepreneurship theories with underlying empirical studies. These are: 1) Economic entrepreneurship theory, 2) Psychological entrepreneurship theory, 3) Sociological entrepreneurship theory, 4) Anthropological entrepreneurship theory, 5) Opportunity-Based entrepreneurship theory, and 6) Resource-Based entrepreneurship theory. These theories offer us a fairly good opportunity to refocus our efforts at integrating the diverse viewpoints.
Economic Entrepreneurship Theories
The economic entrepreneurship theory has deep roots in the classical and neoclassical theories of economics, and the Austrian market process (AMP). These theories explore the economic factors that enhance entrepreneurial behavior.
Classical Theory
The classical theory extolled the virtues of free trade, specialization, and competition (Ricardo, 1817; Smith, 1776). The theory was the result of Britain’s industrial revolution which took place in the mid-1700 and lasted until the 1830s.The classical movement described the directing role of the entrepreneur in the context of production and distribution of goods in a competitive marketplace (Say, 1803). Classical theorists articulated three modes of production: land; capital; and labor. There have been objections to the classical theory. These theorists failed to explain the dynamic upheaval generated by entrepreneurs of the industrial age (Murphy, Liao & Welsch, 2006).
Neo-classical Theory
The neo-classical model emerged from the criticisms of the classical model and indicated that economic phenomena could be relegated to instances of pure exchange, reflect an optimal ratio, and transpire in an economic system that was basically closed. The economic system consisted of exchange participants, exchange occurrences, and the impact of results of the exchange on other market actors. The importance of exchange coupled with diminishing marginal utility created enough impetus for entrepreneurship in the neoclassical movement (Murphy, Liao & Welsch, 2006).
Some criticisms were raised against the neo-classical conjectures. The first is that aggregate demand ignores the uniqueness of individual-level entrepreneurial activity. Furthermore, neither use nor exchange value reflects the future value of innovation outcomes. Thirdly, rational resource allocation does not capture the complexity of market-based systems. The fourth point raised was that efficiency-based performance does not subsume innovation and non-uniform outputs; known means/ends and perfect or semi-perfect knowledge does not describe uncertainty. In addition, perfect competition does not allow innovation and entrepreneurial activity. The fifth point is that it is impossible to trace all inputs and outputs in a market system. Finally, entrepreneurial activity is destructive to the order of an economic system.
Austrian Market Process (AMP)
These unanswered questions of the neo-classical movement led to a new movement which became known as the Austrian Market process (AMP). The AMP, a model influenced by Joseph Aloi Schumpeter (1934) concentrated on human action in the context of an economy of knowledge. Schumpeter (1934) described entrepreneurship as a driver of market-based systems. In other words, an important function of an enterprise was to create something new which resulted in processes that served as impulses for the motion of market economy.
Murphy, Liao & Welsch (2006) contend that the movement offered a logic dynamic reality. In explaining this, they point to the fact that knowledge is communicated throughout a market system (e.g. via price information), innovation transpires, entrepreneurs satisfy market needs, and system-level change occurs. If an entrepreneur knows how to create new goods or services, or knows a better way to do so, benefits can be reaped through this knowledge. Entrepreneurs effectuate knowledge when they believe it will procure some individually-defined benefits.
The earlier neoclassical framework did not explain such activity; it assumed perfect competition, carried closed-system assumptions, traced observable fact data, and inferred repeatable observation-based principles. By contrast, AMP denied assumptions that circumstances are repeatable, always leading to the same outcomes in an economic system. Rather, it held entrepreneurs are incentivized to use episodic knowledge (that is, possibly never seen before and never to be seen again), to generate value.
Thus, the AMP was based on three main conceptualizations (Kirzner, 1973). The first was the arbitraging market in which opportunities emerge for given market actors as others overlook certain opportunities or undertake the suboptimal activity. The second was alertness to profit-making opportunities, which entrepreneurs discover and entrepreneurial advantage. The third conceptualization, following Say (1803) and Schumpeter (1934), was that ownership is distinct from entrepreneurship. In other words, entrepreneurship does not require ownership of resources, an idea that adds context to uncertainty and risk (Knight, 1921). These conceptualizations show that every opportunity is unique and therefore previous activity cannot be used to predict outcomes reliably.
The AMP model is not without criticisms. The first of the criticisms is that market systems are not purely competitive but can involve antagonist cooperation. The second is that resource monopolies can hinder competition and entrepreneurship. The third is that fraud /deception and taxes/controls also contribute to market system activity. The fourth is that private and state firms are different but both can be entrepreneurial and fifth, entrepreneurship can occur in non-market social situations without competition. Empirical studies by Acs and Audretsch (1988) have rejected the Schumpeterian argument that economies of scale are required for innovation. The criticisms of the AMP have given impetus to recent explanations from psychology, sociology, anthropology, and Management.
Psychological Entrepreneurship Theories
The level of analysis in psychological theories is the individual (Landstrom, 1998). These theories emphasize personal characteristics that define entrepreneurship. Personality traits need for achievement and locus of control are reviewed and empirical evidence presented for three other new characteristics that have been found to be associated with entrepreneurial inclination. These are risk-taking, innovativeness, and tolerance for ambiguity.
Personality Traits theory
Coon (2004) defines personality traits as “stable qualities that a person shows in most situations.” To the trait theorists, there are enduring inborn qualities or potentials of the individual that naturally make him an entrepreneur. The obvious or logical question on your mind may be “What are the exact traits/inborn qualities?” The answer is not a straightforward one since we cannot point at particular traits. However, this model gives some insight into these traits or inborn qualities by identifying the characteristics associated with the entrepreneur. The characteristics give us a clue or an understanding of these traits or inborn potentials. In fact, explaining personality traits means making an inference from behavior.
Some of the characteristics or behaviors associated with entrepreneurs are that they tend to be more opportunity was driven (they nose around), demonstrate the high level of creativity and innovation, and show the high level of management skills and business know-how. They have also been found to be optimistic, (they see the cup as half full then as half empty), emotionally resilient and have mental energy, they are hard workers, show intense commitment and perseverance, thrive on competitive desire to excel and win, tend to be dissatisfied with the status quo and desire improvement, entrepreneurs are also transformational in nature, who are lifelong learners and use failure as a tool and springboard. They also believe that they can personally make a difference, are individuals of integrity and above all visionary.
The trait model is still not supported by research evidence. The only way to explain or claim that it exists is to look through the lenses of one’s characteristics/behaviors and conclude that one has the inborn quality to become an entrepreneur.
Locus of Control
Locus of control is an important aspect of personality. The concept was first introduced by Julian Rotter in the 1950s. Rotter (1966) refers to Locus of Control as an individual’s perception about the underlying main causes of events in his/her life. In other words, a locus of control orientation is a belief about whether the outcomes of our actions are contingent on what we do (internal control orientation) or on events outside our personal control (external control orientation). In this context, the entrepreneur’s success comes from his/her own abilities and also support from outside. The former is referred to as internal locus of control and the latter is referred to as external locus of control. While individuals with an internal locus of control believe that they are able to control life events, individuals with an external locus of control believe that life’s events are the result of external factors, such as chance, luck or fate. Empirical findings that internal locus of control is an entrepreneurial characteristic have been reported in the literature (Cromie, 2000, Ho and Koh, 1992; Koh, 1996; Robinson et al., 1991). In a student sample, internal locus of control was found to be positively associated with the desire to become an entrepreneur (Bonnett & Furnham, 1991).
Rauch and Frese (2000) also found that business owners have a slightly higher internal locus of control than other populations. Other studies have found a high degree of innovativeness, competitive aggressiveness, and autonomy reports (Utsch et al., 1999). The same is reported of protestant work ethic beliefs (Bonnet and Furnham, 1991), as well as risk taking (Begley & Boyd, 1987).
Need for Achievement theory
While the trait model focuses on enduring inborn qualities and locus of control on the individual’s perceptions about the rewards and punishments in his or her life, (Pervin, 1980,), need for achievement theory by McClelland (1961) explained that human beings have a need to succeed, accomplish, excel or achieve. Entrepreneurs are driven by this need to achieve and excel. While there is no research evidence to support personality traits, there is evidence for the relationship between achievement motivation and entrepreneurship (Johnson, 1990). Achievement motivation may be the only convincing phonological factor related to new venture creation (Shaver & Scott, 1991).
Risk taking and innovativeness, need for achievement, and tolerance for ambiguity had the positive and significant influence on entrepreneurial inclination Mohar, Singh and Kishore (2007). However, a locus of control (LOC) had the negative influence on entrepreneurial inclination. The construct locus of control was also found to be highly correlated with variables such as risk-taking, need for achievement, and tolerance for ambiguity. The recent finding on risk taking strengthens earlier empirical studies which indicate that aversion to risk declines as wealth rises, that is, one’s net assets and value of future income (Szpiro, 1986).
In complementing Szpiro’s observation, Eisenhauer (1995) suggests that success in entrepreneurship, by increasing wealth, can reduce the entrepreneur’s degree of risk aversion, and encourage more venturing. In his view, entrepreneurship may, therefore, be a self-perpetuating process. Further evidence suggests that some entrepreneurs exhibit mildly risk-loving behavior (Brockhaus, 1980). These individuals prefer risks and challenges of venturing to the security of stable income.
Sociological Entrepreneurship Theory
The sociological theory is the third of the major entrepreneurship theories. Sociological enterprise focuses on the social context. In other words, in the sociological theories, the level of analysis is traditionally the society (Landstrom, 1998).
Reynolds (1991) has identified four social contexts that relate to entrepreneurial opportunity. The first one is social networks. Here, the focus is on building social relationships and bonds that promote trust and not opportunism. In other words, the entrepreneur should not take undue advantage of people to be successful; rather success comes as a result of keeping faith with the people.
The second he called the life course stage context which involves analyzing the life situations and characteristic of individuals who have decided to become entrepreneurs. The experiences of people could influence their thought and action so they want to do something meaningful with their lives.
The third context is ethnic identification. One’s sociological background is one of the decisive “push” factors to become an entrepreneur. For example, the social background of a person determines how far he/she can go. Marginalized groups may violate all obstacles and strive for success, spurred on by their disadvantaged background to make life better. The fourth social context is called population ecology. The idea is that environmental factors play an important role in the survival of businesses. The political system, government legislation, customers, employees, and competition are some of the environmental factors that may have an impact on survival of new venture or the success of the entrepreneur.
Anthropological Entrepreneurship Theory
The fourth major theory is referred to as the anthropological theory. Anthropology is the study of the origin, development, customs, and beliefs of a community. In other words, the culture of the people in the community. The anthropological theory says that for someone to successful initiate a venture the social and cultural contexts should be examined or considered.
Here the emphasis is on the cultural entrepreneurship model. The model says that new venture is created by the influence of one’s culture. Cultural practices lead to entrepreneurial attitudes such as innovation that also lead to venture creation behavior. Individual ethnicity affects attitude and behavior (Baskerville, 2003) and culture reflects particular ethnic, social, economic, ecological, and political complexities in individuals (Mitchell et al., 2002a). Thus, cultural environments can produce attitude differences (Baskerville, 2003) as well as entrepreneurial behavior differences (North, 1990; Shane 1994).
Opportunity–Based Entrepreneurship Theory
The opportunity-based theory is anchored by names such as Peter Drucker and Howard Stevenson. An opportunity-based approach provides a wide-ranging conceptual framework for entrepreneurship research (Fiet, 2002; Shane, 2000).
Entrepreneurs do not cause change (as claimed by the Schumpeterian or Austrian school) but exploit the opportunities that change (in technology, consumer preferences etc.) creates (Drucker, 1985). He further says, “This defines entrepreneur and entrepreneurship, the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” What is apparent in Drucker’s opportunity construct is that entrepreneurs have an eye more for possibilities created by change than the problems.
Stevenson (1990) extends Drucker’s opportunity-based construct to include resourcefulness. This is based on research to determine the differences between entrepreneurial management and administrative management. He concludes that the hub of entrepreneurial management is the “pursuit of opportunity without regard to resources currently controlled.”
Resource-Based Entrepreneurship Theories
The Resource-based theory of entrepreneurship argues that access to resources by founders is an important predictor of opportunity-based entrepreneurship and new venture growth (Alvarez & Busenitz, 2001). This theory stresses the importance of financial, social and human resources (Aldrich, 1999). Thus, access to resources enhances the individual’s ability to detect and act upon discovered opportunities (Davidson & Honing, 2003). Financial, social and human capital represents three classes of theories under the resource – based entrepreneurship theories.
Financial Capital/Liquidity Theory
Empirical research has shown that the founding of new firms is more common when people have access to financial capital (Blanchflower et al, 2001, Evans & Jovanovic, 1989, and Holtz-Eakin et al, 1994). By implication, this theory suggests that people with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up a firm to do so (Clausen, 2006).
However , other studies contest this theory as it is demonstrated that most founders start new ventures without much capital and that financial capital is not significantly related to the probability of being nascent entrepreneurs (Aldrich,1999, Kim, Aldrich & Keister, 2003, Hurst & Lusardi, 2004, Davidson & Honing, 2003).This apparent confusion is due to the fact that the line of research connected to the theory of liquidity constraints generally aims to resolve whether a founder’s access to capital is determined by the amount of capital employed to start a new venture Clausen (2006). In his view, this does not necessarily rule out the possibility of starting a firm without much capital. Therefore, founders access to capital is an important predictor of new venture growth but not necessarily important for the founding of a new venture (Hurst & Lusardi, 2004).
This theory argues that entrepreneurs have individual-specific resources that facilitate the recognition of new opportunities and the assembling of new resources for the emerging firm (Alvarez & Busenitz, 2001). Research shows that some persons are more able to recognize and exploit opportunities than others because they have better access to information and knowledge (Aldrich, 1999, Anderson &Miller, 2003, Shane 2000, 2003, Shane & Venkataraman, 2000).
Social Capital or Social Network Theory
Entrepreneurs are embedded in a larger social network structure that constitutes a significant proportion of their opportunity structure (Clausen, 2006). Shane and Eckhardt (2003) says “an individual may have the ability to recognize that a given entrepreneurial opportunity exists, but might lack the social connections to transform the opportunity into a business startup. It is thought that access to a larger social network might help overcome this problem.”
In a similar vein, Reynolds (1991) mentioned social network in his four stages in the sociological theory. The literature on this theory shows that stronger social ties to resource providers facilitate the acquisition of resources and enhance the probability of opportunity exploitation (Aldrich & Zimmers, 1986).Other researchers have suggested that it is important for nascent founders to have access to entrepreneurs in their social network, as the competence these people have represents a kind of cultural capital that nascent ventures can draw upon in order to detect opportunities (Aldrich & Cliff, 2003., Gartner et al, 2004., Kim, Aldrich & Keister, 2003).
Human Capital Entrepreneurship Theory
Underlying the human capital entrepreneurship theory are two factors, education, and experience (Becker, 1975). The knowledge gained from education and experience represents a resource that is heterogeneously distributed across individuals and in effect central to understanding differences in opportunity identification and exploitation (Anderson & Miller, 2003, Chandler & Hanks, 1998, Gartner et al, 2005, Shane & Venkataraman, 2000).
Empirical studies show that human capital factors are positively related to becoming a nascent entrepreneur (Kim, Aldrich & Keister, 2003, Davidson & Honing,2003, Korunka et al, 2003), increase opportunity recognition and even entrepreneurial success (Anderson & Miller, 2003, Davidson & Honing,2003).
The conclusion of Entrepreneurship Theories
The purpose of this paper was to examine the theories and research outcomes of entrepreneurship. From the above discussions, it is clear that the field of entrepreneurship has some interesting and relevant theories (ranging from economic, psychological, sociological, anthropological, opportunity-based, to resource based) which are underpinned by empirical research evidence. This development holds a rather brighter future for the study, research, and practice of entrepreneurship.
Demographics of Entrepreneurs; Entrepreneurship traditionally defines as the process of designing, launching and running a new business, which typically begins as a small business, such as a startup company, offering a product, process or service for sale or hire. It defines as the “capacity and willingness to develop, organize, and manage a business venture along with any of its risks to make a profit”.
Here are explain common questions in Corporate, Who Changing Demographics of Entrepreneurs?
While definitions of entrepreneurship typically focus on the launching and running of businesses, due to the high risk involves in launching a start-up, a significant proportion of businesses have to close, due to a “Lack of funding, bad business decisions, an economic crisis or a combination of all of these” or due to lack of market demand. In the 2000s, the definition of “Entrepreneurship” has expand to explain how and why some individuals (or teams) identify opportunities, evaluate them as viable, and then decide to exploit them, whereas others do not, and, in turn, how entrepreneurs use these opportunities to develop new products or services, launch new firms or even new industries and create wealth.
Definitions of Entrepreneurs:
Traditionally, an entrepreneur defines as;
“A person who organizes and manages any enterprise, especially a business, usually with considerable initiative and risk.” “Rather than working as an employee, an entrepreneur runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur commonly sees as a business leader and innovator of new ideas and business processes.”
Entrepreneurs tend to be good at perceiving new business opportunities and they often exhibit positive biases in their perception (i.e., a bias towards finding new possibilities and seeing unmet market needs) and a pro-risk-taking attitude that makes them more likely to exploit the opportunity.
“Entrepreneurial spirit characterizes by innovation and risk-taking.”
While entrepreneurship often associates with new, small, for-profit start-ups, entrepreneurial behavior can see in small, medium and large-sized firms, new and established firms and in for-profit and not-for-profit organizations, including voluntary sector groups, charitable organizations, and government.
For example, in the 2000s, the field of social entrepreneurship identified, in which entrepreneurs combine business activities with humanitarian, environmental or community goals.
Now, Here is Who Changing Demographics of Entrepreneurs:
The following demographics of entrepreneurs how to changing below explains;
Over the past 10 years, the demographic makeup of entrepreneurial firms has changed in the United States and around the world. Of the 27.5 million businesses in the United States, women, minorities, seniors, and young people own an increasingly larger number of them. This is an exciting development for the entrepreneurial sector of the U.S economy.
Women Entrepreneurs:
While men are still more likely to start businesses than women, the number of women-owned businesses is increasing. According to the U.S. Census Bureau, there were 6.5 million privately-held women-owned firms in the United States in 2002, the most recent year the U.S. Census Bureau collected ownership data. These firms generated an estimated $940 billion in sales and employed 7.1 million people. The number of women-owned firms increased by 19.8 percent from 1997 to 2002, compared with a growth rate of 10.3 percent for United States firms overall.
According to a survey of both women-owned and men-owned businesses in the United States, the average age of the individuals who lead women-owned firms is 44.7 years old. A total of 52.7 percent of women-owned firms are home-based, 31.9 percent are multi-owner firms, and 19.5 percent were started for less than $2,000. The top industry for women-owned businesses is retail (19 percent) followed by professional, management, and educational services (16.3 percent). Women-owned firms still trail male-owned businesses in terms of sales and profits. The average women-owned firm has annual sales of $60,264 and annual profits of $14,549, compared to annual sales of $118,987 and profits of $30,373 for male-owned businesses.
There are a growing number of groups that support and advocate for women-owned businesses. An example is Count Me In (www.makemineamillion.org), which is the leading national not-for-profit provider of resources, business education, and community support for women entrepreneurs.
Minority Entrepreneurs:
There has been a substantial increase in minority entrepreneurs in the United States from 1996 to 2010. The biggest jump has come in Latino entrepreneurs, which increased from 11 percent to 23 percent from 1996 to 2010, followed by Asian entrepreneurs, which jumped from 4 percent to 6 percent during the same period. While these numbers are encouraging, in general, the firms created by minority entrepreneurs lag behind averages for all firms in terms of economic indicators. The Kauffman Foundation is one group that actively engages in research to not only track the growth in minority entrepreneurs but to better understand how to strengthen the infrastructures and networks to enable minority entrepreneurs to reach higher levels of financial success.
Similar to women entrepreneurs, an important factor facilitating the growth of minority entrepreneurs is the number of organizations that promote and provide assistance. Examples include the Latin Business Association, Black Business Association, National Indian Business Association, The National Council of Asian American Business Associations, and the Minority Business Development Agency, which is part of the United States Department of Commerce.
Senior Entrepreneurs:
The increase in entrepreneurial activity among senior entrepreneurs, consisting of people 55 years and older, between 1996 and 2010 is substantial (from 14 percent to 23 percent). This increase attribute to several factors, including corporate downsizing, an increasing desire among older workers for more personal fulfillment in their lives, and growing worries among seniors that they need to earn additional income to pay for future health care services and other expenses. Many people in the 55 and older age range have substantial business experience, financial resources that they can draw upon, and excellent vigor and health.
There are several interesting statistics associated with the increasing incidence of senior entrepreneurs. For example, 39 is now the average age of the founders of technology companies in the United States, with twice as many over age 50 as under age 25. Similarly, the steady increase in life expectancy means that Americans are not only living longer, but are living healthier longer, and are likely to remain engaged in either a job or an entrepreneurial venture longer in their lives than earlier generations.
Young Entrepreneurs:
Interestingly, a drop in new entrepreneurial activity for people in the 20 to 34 age range occurred between 1996 and 2010 (from 35 percent in 1996 to 26 percent in 2010); nonetheless, the number of young people interested in entrepreneurship remains strong. At the high school and younger level, according to a Harris Interactive survey of 2,438 individuals ages 8 to 21, 40 percent said they’d like to start their own business someday. A total of 59 percent of the 8- to 21-year-olds said they know someone who has started his or her own business. The teaching of entrepreneurship courses is becoming increasingly common in both public and private high schools. Not-for-profit agencies involving in these efforts too.
The Network for Teaching Entrepreneurship (NFTE), for example, provides entrepreneurship education programs to young people from low-income communities. The organization’s largest annual event calls “Lemonade Day” and held each May. In 2011, over 120,000 kids attended one-day entrepreneurial training sessions in 31 cities. The program teaches children and teens how to borrow money and repay investors who help start their stands, and what to do with the profit, including donating some to nonprofit causes. Since its founding, the NFTE has reached more than 300,000 young people, and currently, has programs in 21 states and 10 foreign countries.
In addition to the NFTE,
A growing number of colleges and universities are offering entrepreneurship-focused programs for high school students. Babson College, for example, offers three Summer Study Programs for high school students. The first two programs, Babson Entrepreneur Development Experience and Babson Idea Generation Program, are resident programs for high school students entering their junior or senior year. Members of the Babson faculty teach in these programs; each program lasts seven weeks. The third program, Service Learning Experience, is a nonresident program for high school sophomores who are passionate about social outreach.
On college campuses, interest in entrepreneurship education is at an all-time high, as will be described throughout this article. More than 2,000 colleges and universities in the United States, which is about two-thirds of the total, offer at least one course in entrepreneurship. Although the bulk of entrepreneurship education takes place within business schools, many other colleges and departments are offering entrepreneurship courses as well—including engineering, agriculture, theater, dance, education, law, and nursing.
Notes: Here are read it Who Changing Demographics of Entrepreneurs? Would you like more read it; What is an Entrepreneur?, and also read it What Is Entrepreneurship?, don’t forget read it; Why Become an Entrepreneur?, and Common Myths About Entrepreneurs.
Common Myths About Entrepreneurs; There are many misconceptions about who entrepreneurs are and what motivates them to launch firms to develop their ideas. Some misconceptions are because of the media covering atypical entrepreneurs, such as a couple of college students who obtain venture capital to fund a small business that they grow into a multimillion-dollar company.
Here are the best fourteen Common Myths About Entrepreneurs.
Such articles rarely state that these entrepreneurs are the exception rather than the norm and that their success is a result of carefully executing an appropriate plan to commercialize what inherently is a solid business idea. Indeed, the success of many of the entrepreneurs we study in each chapter’s Opening Profile is a result of carefully executing the different aspects of the entrepreneurial process. Let’s look at the most common myths and the realities of entrepreneurs.
An entrepreneur has been defining as,
“A person who starts, organizes and manages any enterprise, especially a business, usually with considerable initiative and risk”. “Rather than working as an employee, an entrepreneur runs a small business and assumes all the risk and reward of a given business venture, idea, or good or service offered for sale. The entrepreneur commonly sees as a business leader and innovator of new ideas and business processes.”
Here are Fourteen Common types of Myths of Entrepreneurs:
The following common myths of entrepreneurs are below;
Myth I: Entrepreneurs are born, not made;
This myth bases on the mistaken belief that some people genetically predisposes to be entrepreneurs. The consensus of many hundreds of studies on the psychological and sociological makeup of entrepreneurs is that entrepreneurs are not genetically different from other people. This evidence can interpret as meaning that no one is “born” to be an entrepreneur and that everyone has the potential to become one. Whether someone does or doesn’t is a function of environment, life experiences, and personal choices. However, there are personality traits and characteristics commonly associated with entrepreneurs; these are Common traits, myth, and Characteristics of Entrepreneurs;
A moderate risk taker – Optimistic disposition
A networker – Persuasive
Achievement motivated – Promoter
Alert to opportunities – Resource assembler/leverager
Creative – Self-confident
Decisive – Self-starter
Energetic – Tenacious
A strong work ethic – Tolerant of ambiguity
Lengthy attention span – Visionary
These traits are developed over time and evolve from an individual’s social context. For example, studies show that people with parents who were self-employed are more likely to become entrepreneurs. After witnessing a father’s or mother’s independence in the workplace, an individual is more likely to find independence appealing.
Similarly, people who personally know an entrepreneur is more than twice as likely to involve in starting a new firm as those with no entrepreneur acquaintances or role models. The positive impact of knowing an entrepreneur is explained by the fact that direct observation of other entrepreneurs reduces the ambiguity and uncertainty associated with the entrepreneurial process.
Myth II: Entrepreneurs are gamblers;
The second myth about entrepreneurs is that they are gamblers and take big risks. The truth is, entrepreneurs are usually moderate risk-takers, as are most people. The idea that entrepreneurs are gamblers originates from two sources. First, entrepreneurs typically have less structured jobs, and so they face a more uncertain set of possibilities than managers or rank-and-file employees.
For example, an entrepreneur who starts a social network consulting service has a less stable job than one working for a state governmental agency. Second, many entrepreneurs have a strong need to achieve and often set challenging goals, a behavior that sometimes equates with risk-taking.
Myth III: Entrepreneurs motivate primarily by money;
It is naïve to think that entrepreneurs don’t seek financial rewards. As discussed previously, however, money is rarely the primary reason entrepreneurs start new firms and persevere. The importance and role of money in a start-up is put in perspective by Colin Angle, the founder, and CEO of iRobot, the maker of the popular Roomba robotic vacuum cleaner.
Commenting on his company’s mission statement Angle said: Our, “Build Cool Stuff, Deliver Great Products, Have Fun, Make Money, Change the World” (mission statement) kept us (in the early days of the Company) unified with a common purpose while gut-wrenching change surrounded us. It reminded us that our goal was to have fun and make money. Most importantly, it reminded us that our mission was not only to make money but to change the world in the process. Some entrepreneurs warn that the pursuit of money can be distracting. Media mogul Ted Turner said, “If you think money is a really big deal you’ll be too scared of losing it to get it”.
Extra Things;
Similarly, Sam Walton, commenting on all the media attention that surrounded him after he was named the richest man in America by Forbes magazine in 1985, said:
Here’s the thing: money has never meant that much to me, not even in the sense of keeping score. … We’re not ashamed of having money, but I just don’t believe a big showy lifestyle is appropriate for anywhere, least of all here in Bentonville where folks work hard for their money. We all know that everyone puts on their trousers one leg at a time. … I still can’t believe it was news that I get my hair cut at the barbershop. Where else would I get it cut? Why do I drive a pickup truck? What am I supposed to haul my dogs around in, a Rolls-Royce?
Myth IV: Entrepreneurs should be young and energetic;
Entrepreneurial activity is fairly evenly spread out over age ranges. According to an Index of Entrepreneurial Activity maintained by the Kauffman Foundation, 26 percent of entrepreneurs of ages 20 to 34, 25 percent of ages 35 to 44, 25 percent of ages 45 to 54, and 23 percent of ages 55 to 64. The biggest jump, by far, from 1996 to 2010, which is the period the Kauffman date covers, is the 55 to 64 age bracket. A total of 14 percent of entrepreneurs were 55 to 64 years old in 1996, compared to 23 percent in 2010.
The increasing number of older-aged entrepreneurs is a big change in the entrepreneurial landscape in the United States. Although it is important to be energetic, investors often cite the strength of the entrepreneur (or team of entrepreneurs) as their most important criterion in the decision to fund new ventures. A sentiment that venture capitalists often express is that they would rather fund a strong entrepreneur with a mediocre business idea than fund a strong business idea and a mediocre entrepreneur.
What makes an entrepreneur “strong” in the eyes of an investor is the experience in the area of the proposed business, skills and abilities that will help the business, a solid reputation, a track record of success, and passion about the business idea. The first four of these five qualities favor older rather than younger entrepreneurs.
Myth V: Entrepreneurs love the spotlight;
Indeed, some entrepreneurs are flamboyant; however, the vast majority of them do not attract public attention. Many entrepreneurs, because they are working on proprietary products or services, avoid public notice. Consider that entrepreneurs are the source of the launch of many of the 2,850 companies listed on the NASDAQ, and many of these entrepreneurs are still actively involved with their firms. But how many of these entrepreneurs can you name? Perhaps a half dozen? Most of us could come up with Bill Gates of Microsoft, Jeff Bezos of Amazon.com, Steve Jobs of Apple Inc., Mark Zuckerberg of Facebook and maybe Larry Page and Sergey Brin of Google.
Whether or not they sought attention, these are the entrepreneurs who are often in the news. But few of us could name the founders of Netflix, Twitter, or GAP even though we frequently use these firms’ products and services. These entrepreneurs, like most, have either avoided attention or been passed over by the popular press. They defy the myth that entrepreneurs, more so than other groups in our society, love the spotlight. Now, Common Myths About Entrepreneurs by businesstown.com.
Myth VI: Entrepreneurs Are High-Risk Takers;
Entrepreneurs, Rye states, are often thought of in terms of the risk they assume. Even the dictionary describes an entrepreneur as one who assumes business risks. However, like all prudent businesspeople, entrepreneurs know that taking high risks is a gamble. Entrepreneurs are neither high nor low-risk takers. They prefer situations in which they can influence the outcome, and they like challenges if they believe the odds are in their favor.
They seldom act until they have assessed all the risks associated with an endeavor, and they have an innate ability to make sense out of complexity. These are traits that carry them on to success where others fail. I certainly agree with Rye. Entrepreneurs generally seek the best risk/reward situation. Like most humans, they are often are a little hesitant to risk everything and take wild chances.
Myth VII: Entrepreneurs Mainly Motivate to Get Rich;
Any successful entrepreneur, argues Rye, will tell you that starting a business is not a get-rich-quick alternative. New businesses usually take from one to three years to turn a profit. In the meantime, you consider being doing well if you break even. During the business start-up stage, entrepreneurs do not buy anything they do not need, such as fancy cars. Most drive junk cars and use their surplus money to pay off debt or reinvest it in the business. Their focus is on creating a company with a strong financial base for future expansion.
I largely agree with Rye. For entrepreneurs, money isn’t everything. But nothing is embarrassing about being partially motivated by money, as are most entrepreneurs. If entrepreneurs couldn’t get rich and get a financial reward for their work, the United States could be almost as poor as Cuba. It is OK to make money, build a business, and help build your local economy in the process.
Myth VIII: Entrepreneurs Give Little Attention to Their Personal Life;
All successful entrepreneurs, Rye says, work long hours, which cuts into their personal life. However, long working hours are not unique to entrepreneurs. Many corporate managers and executives work well beyond the average 40-hour workweek. The primary difference between the entrepreneur and his or her corporate counterpart is schedule control.
In the corporate world, you may not have control over your schedule. If some higher-level manager calls a Saturday meeting, you’ve got no choice but to be there. Entrepreneurs don’t mind working 60- to 70-hour weeks, but they will do everything they can to preserve their private time. They schedule important meetings during the week so that they can have weekends off for their personal life, which is very important to them.
I find what Rye says is true, that most entrepreneurs do not give a lot of attention to their personal lives. I have, at times, been an outlier and had almost no personal time, such as when I was a full-time student at Harvard Business School and running four start-up businesses at the same time, or was a full-time college student and starting an independent newspaper business. Sometimes, as an entrepreneur with an especially fast-growing business, you are going to have to sacrifice personal time.
Myth IX: Entrepreneurs Are Often High-Tech Wizards;
We are all aware, says Rye, of a few high-tech entrepreneurial wizards who have made it. Media attention overplays the success of these few high-tech entrepreneurs. Only a small percentage of today’s businesses consider high tech, and what was considered high tech just a few years ago not considers high tech by today’s standards.
It takes high-profit margins, not high tech, to make it as an entrepreneur. One has only to look at the recent problems that have plagued the computer industry to understand this basic principle. High-tech personal computers did very well when they made high-profit margins. The industry then went into a nosedive when profits fell.
Yes, I think Rye is right on the money. Very few businesses require high tech abilities. I have started and run a multimedia business, an interactive software business, and two Internet businesses, with virtually no tech experience or expertise. (Although to be sure, I did learn to do a little computer programming along the way when I start these businesses, to help me appreciate what the engineers were doing). Furthermore, most businesses are not even tech businesses at all.
Myth X: Entrepreneurs Are Loners and Introverts;
Initially, Rye says, entrepreneurs might work alone on a business idea by tinkering in the solitude of their garage or den. In this myth, I don’t agree with Rye. An astute entrepreneur knows that he or she must draw on the experience and ideas of others to succeed. Entrepreneurs will actively seek the advice of others and will make many business contacts to validate their business ideas. The entrepreneur who is a loner and will not talk to anybody will never start a successful business.
I’ve spent a lot of time working largely in isolation during the early stages of building businesses. I think a lot of other entrepreneurs have, too. Not ideal in hindsight, but that’s what I often did. Generally, I think entrepreneurs are willing to work independently if it is necessary to succeed. But even independent-minded people can get lonely, especially if you are working day and night in a small home-based business.
Myth XI: Entrepreneurs Are Job Hoppers;
A recent study of successful entrepreneurs, notes Rye, showed that most of them worked for a large corporation for several years before they started their own business. In every instance, they used the corporate structure to learn everything they could about the business they intended to establish before they started their own. Entrepreneurs are not job hoppers.
I tend to agree with Rye. I think most entrepreneurs have usually had a good track record in the workplace. Most have spent years working for other people before going on their own. But you don’t have to do so to succeed. The longest single job I ever held lasted about eight weeks, but in total, I’ve only worked a few months for anyone else in my entire lifetime.
Myth XII: Entrepreneurs Finance Their Business with Venture Capital;
Entrepreneurs, Rye says, know that venture capital money is one of the most expensive forms of funding they can get. Consequently, they will avoid venture capitalists, using them only as a last resort. Most entrepreneurs fund their business from personal savings, or by borrowing from friends or lending institutions.
I often remind people that venture capital is a relatively small industry and, as such, finances an extremely minute number of small businesses. To finance by a VC firm, your business might need to meet all kinds of criteria, and then find a VC firm that loves it. Furthermore, since VC firms tend not to want to put much money into any one startup, most VC-funded startups have to get money from not one but several different firms.
Myth XIII: Entrepreneurs Are Often Ruthless or Deceptive;
Rye thinks that some people believe that to make it as an entrepreneur; you have to be deceptive and step on anybody who gets in your way. On the contrary, this mode of operation doesn’t work for the entrepreneur. The truly ruthless or deceptive entrepreneur will often alienate others; and, forces to waste time and energy repairing relationships with employees, customers, and suppliers, or simply fail.
I don’t know if people predispose to think negatively of entrepreneurs as Rye states. But, in any event, I think entrepreneurs have some bad apples in their ranks. Not many, but some. I have lost sales to competitors who fabricate the facts, exaggerate the truth, slander their competitors, and engage in all kinds of other unethical behavior. But I have found that such competitors eventually implode.
Often, they lose their best employees, whom they also treat poorly, or they lose their customers. Once, when I was in a dogfight with a ruthless competitor in a business that was extremely dependent upon sales, his three best salespeople, as well as his sales manager, approach me on their initiative and end up joining my team.
Myth XIV: Entrepreneurs Have Limited Dedication;
Rye says it is a myth that entrepreneurs do not dedicate to any one thing. But he adds that dedication is an attribute that all successful entrepreneurs exhibit. They dedicate to becoming their boss. To this end, they’ll work like a dog to make their business succeed.
While I agree with Rye that entrepreneurs will work like a dog to succeed; I do think that many entrepreneurs can change businesses or direction quicker than other people. Often, this ability to switch direction quickly can be essential for success, and entrepreneurs tend not to switch direction recklessly, although there are always exceptions. Finally, you may understand the best fourteen Common Myths About Entrepreneurs.
Notes: Here are read it Common Myths About Entrepreneurs, Would you like more read it; What is an Entrepreneur? and also, read it What Is Entrepreneurship?, don’t forget read it; Why Become an Entrepreneur?, Next up; Who Changing Demographics of Entrepreneurs?.
Characteristics of Authority; First, Some remembering of what is the Authority? The power or right to give orders, make decisions and enforce obedience. The right to act in a specified way delegated from one person or organization to another. A person or organization having political or administrative power and control. The power to influence others, especially because of one’s commanding manner or one’s recognized knowledge about something.
Here are explain; What is Characteristics of Authority? with Theories Sources.
A person with extensive or specialized knowledge about a subject; an expert.
Sources of Authority:
There are broadly five theories regarding the sources from which authority originates. They are:
The formal authority theory.
Acceptance of authority theory.
The competence theory.
Traditional Authority.
Charismatic Authority.
Brief explanations of the above three theories are given below;
The formal authority theory:
According to his theory, the authority flows top to bottom through the structure of an organization. In other words, the authority flows from the General Manager to his departmental manager and in turn, from the departmental manager to his superintendent and the like. This is explained in the following diagram.
Board of Directors → General Manager → Sales Manager → Sales Representatives → Workers
The Formal Authority Theory is otherwise called Traditional Authority Theory and Top-Down Authority Theory. In the case of a public limited company, the authority is in the hands of shareholders and they delegate their authority to top management, and in turn, a part of this authority is a delegate to the middle management.
Acceptance of authority theory:
Chester Bannard gave this theory. According to his theory, the authority flows from the superior to the subordinates whenever there is an acceptance on the part of the subordinates. The subordinates should accept the authority but there is no compulsion made by the superior. If the subordinates do not accept the command of their superior, then the superior cannot say to have any authority over them.
According to Bannard,
“An individual will accept the exercise of authority, if the advantages accruing to him from accepting plus the disadvantages accruing to him from not accepting exceed the advantages accruing to him from not accepting plus the disadvantages accruing to him for accepting and conversely, he will not accept the exercise of authority if the latter factors exceed the former.”
The authority of a superior will be effective only when there is the willingness on the part of the subordinate to accept authority and ineffective when there is a lack of readiness to accept the authority on the part of the subordinate. The subordinate will not analyze every order of the superior to accept it or not. In fact, the subordinate without a second thought accepts certain orders of the superior. If the subordinate without any hesitation accepts the order of the superior, it is knowing as the zone of acceptance.
A number of factors will determine a zone of acceptance:
The following acceptance below are;
The subordinate believes that rewards will give to him in appreciation of his efforts and skills.
Sincere services of subordinate to the organization will reward.
A subordinate thinks that he has to accept the authority in a particular situation.
The non-acceptance of authority will result in dismissal of the subordinate from an organization.
It is also accepting on account of special knowledge that a man may possess.
There is no other way available than to accept authority.
It is the duty of the subordinate or it may be the policy of the organization to impose the authority.
It is the duty of the subordinate or it may be the policy of the organization to impose the authority.
People have confidence in the person giving orders.
Competence theory:
This type of authority is investing with the persons by virtue of the office hold by them. The personal power of this type of persons is based on the leadership qualities of the person concerned. In an organization, only one person gets a higher position than others in the course of time-based on leadership qualities possessed by him.
Traditional Authority:
In a family system, the father exercises traditional authority over members of the family. The traditional authority is generally following in the Indian family system. It is the father who guides the activities of the family and others obey out of respect and traditions.
In the traditional form of authority, there is no formal law or structured discipline and relationships are governed by personal loyalty and faithfulness rather than compulsions of rules and regulations or duties of the office.
Charismatic Authority:
The charismatic authority rests on the personal charisma of a leader who commands the respect of his followers. The personal traits such as good looks, intelligence, integrity, etc., influence others and people follow the dictates of their leaders because of such traits.
The people follow the leader because they feel that he will help them in achieving their goals. The charismatic leaders are generally good orators and have a hypnotic effect on the followers. The religious leaders and political leaders like Mahatma Gandhi, John F. Keneddy of America come under this category.
The Charismatic phenomena also extend to film actors, actresses, and war heroes. Film actors and actresses have been successful in raising huge funds for calamities etc. because of their charismatic personalities. Even political parties associate actors and actresses with them to collect crowds for their rallies. People follow some leaders/persons because of their charismatic personalities and not because of any other factor.
What is Characteristics of Authority? with Theories Sources! #Pixabay.
Characteristics of Authority:
The characteristics of authority are briefly explain below;
The basis of getting things done the right to take actions towards completion: Authority gives a right to do things in an organization and affect the behavior of other workers of the organization. It leads to the performance of certain activities for the accomplishment of the defined objectives automatically.
Legitimacy-positional authority: Authority implies a legal right (within the organization itself) available to superiors. This type of right arises due to the tradition followed in an organization, custom or accepted standards of authenticity. The right of a manager to affect the behavior of his subordinates is giving to him on the basis of an organizational hierarchy.
Decision–making the freedom and right to make choices of action: Decision-making is a Pre-requisite of an authority. The manager can command his subordinates to act or not act. This type of decision takes by the manager regarding the functioning of an office.
Implementation as a consequence of the position hold: Implementation influences the personality factors of the manager, who is empowering to use authority. The subordinates or group of subordinates should follow the instructions of the manager regarding the implementation of decisions. The personality factor of one manager may differ from another manager.
Authority is a legal power which is possessed by a person from his superior officers and with the help of which he succeeds in getting the things done by his sub-ordinates. Authority is the key to managerial functions. If the managers do not possess the required authorization, they will not be able to perform their duties properly.
Here are explain; What is the authority? Introduction, Meaning, and Definition.
A manager is in a position to influence his subordinates only by the use of his authority. It is the authorization which enables him to discharge the important functions of planning, coordination, motivation and controlling, etc. in an enterprise.
If proper authorization is not vesting in him, he cannot perform. These functions in the required manner and he cannot hold responsible for all these functions in the absence of proper authorities. It is only the authorities by virtue of which he dominates his subordinates and gets work done by them.
The word authority (derived from the Latin word Auctoritas) can use to mean the right to exercise power given by the State (in the form of government, judges, police officers, etc.), or by academic knowledge of an area (someone that can be an authority on a subject).
What is authority? Introduction, Meaning, and Definition #Pixabay.
The power or right to give orders, make decisions and enforce obedience. The right to act in a specified way delegated from one person or organization to another. A person or organization having political or administrative power and control. The power to influence others, especially because of one’s commanding manner or one’s recognized knowledge about something. A person with extensive or specialized knowledge about a subject; an expert.
Authority is the power to make decisions, which guide the action of others. A delegation of authorization contributes to the creation of an organization. No single person is in a position to discharge all the duties in an organization. In order to finish the work in time, there is a need to delegate authorization and follow the principles of division of labor. Delegation permits a person to extend his influence beyond the limits of his own personal time, energy, and knowledge. It is the “right of decision and command.” Theories Sources with Characteristics of Authority.
Definition of authority:
The Following definitions below are from different authors;
According to Henry Fayol,
“Authority is the right to give orders and the power to exact obedience.”
According to Koontz and O’Donnell,
“Authority is the power to command others to act or not to act, in a manner deemed by the possessor of the authority to further enterprises or departmental purposes.”
According to Terry,
“Authority is the power to exact others to take actions considered appropriate for the achievement of a predetermined objective.”
According to Barnard,
“Authority is the character of a communication (order) in a formal organization by virtue of which it is accepted by a contributor to or member of the organization as governing the action he contributes. That is, as governing or determining what he does or is not to do so far as the organization is concerned.”
While concluding the meaning of authority it can say that authorities in the ordinary sense of the term are nothing more than a legal right. It empowers an individual to make decisions. He is giving a right to command and to exercise control over. Those who are responsible for the execution of policies and programs of the enterprise. For decisions take the authorizing person is holding responsible and is made answerable to his superiors and the organization as a whole.
First, Some Understand the meaning of Coordination:
Coordination is much essential in management. Business has various functions. These functions are performed by different individuals.
Moreover, the performance of these functions requires a division of work and grouping of activities and making decisions at different levels.
All these necessitate coordination for attaining the desired goals. Coordination is concerned with synchronizing, integrating or unifying all the group actions in an enterprise to achieve its objectives.
It is a process by which the manager achieves harmonious group efforts and unity of actions through balancing the activities of different individuals and groups of individuals and reconciling their differences in interest or approach, for the attainment of common goals.
[perfectpullquote align=”right” cite=”” link=”” color=”blue” class=”” size=””]According to Mcfarland, “Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of actions in the pursuit of a common purpose.”[/perfectpullquote]
Now, Here is Importance of Coordination
I. Unity of action: An enterprise has diverse resources; technique, activities etc and they all must be coordinated to bring unity through unity in action.
II. Increase in efficiency and economy: Coordination brings efficiency because it is an effort of all organizational members. It also helps to maintain good relation among all levels of management.
III. Development of personnel: Coordination helps to obtain information about job, qualities of a job holder which helps to analyze about the potentialities of the job holder and improve coordination system.
IV. Differential perception: Different people have a different perception. When all people are coordinated effectively their effort and power are concentrated to achieve organizational goals.
V. Survival of the organization: Coordination helps o harmonize the work resources and physical facilities. When their activities are not harmonized the organization can’t achieve the goal and it can’t survive in the society.
VI. The accomplishment of objectives: When the employees, their task, and available resources are coordinated, their production will be increased and it helps to accomplish the objectives of the organization.
VII. The basis of managerial function: All managerial functions such as planning, organizing, directing, controlling etc can’t be conducted effectively without communication.
VIII. Specialization: In the absence of coordination in the organization the activities can’t be moved in specialized areas. Therefore, it helps in specialization.
And, Finally Here are Techniques of Coordination
I. Well defined goals: The first means or technique of coordination is well-defined goals. The goals of the organization should be clear and well defined. Each individual in the organization should understand the overall goals. When the goals are not well defined the coordination may not effective.
II. Sound organization structure: Coordination is the essence of management. It is not possible without sound organization structure. The authority and responsibility for each and every positions and employee should be clearly defined.
III. Effective communication: Coordination helps in creating proper understanding among persons. Without effective communication, coordination may be effective. The ideas, opinions should be interchanged freely. It is only through effective communication that even individual understand his/her limitations, positions, and responsibility in the organization. Effective communication helps in coordination. Therefore, it is also an important means of coordination.
IV. Proper leadership: Proper leadership leads the subordinates effectively and efficiently. A good managerial leader uses the motivational tools to coordinate the employees with an effective communication system. In short, coordination is made possible through proper leadership.
V. Proper supervision: Supervisors coordinate the subordinates and their activities. Top level management cannot coordinate all employees. In short, proper supervision helps in effective coordination.
VI. Better plans and policies: Coordination is made according to plans and policies of the organization and departments. When the plans and policies are not better coordination is not effective in the organization.
VII. Cooperation: Without cooperation, coordination may not succeed because coordination is related to employees and their activities. When they are not cooperative, coordination may not be made. So, cooperation is essential in the organization.
VIII. Meeting and conference: Coordination may be possible when all employees their all activities and departmental goals are involved in organizational planning and policies. They’re all problems and matters may be involved. When there is an environment of constructive discussion and debate with meeting and conference.
XI. Group decision: The group decision is a decision in which all members of the organization are participated to make decisions. The ideas and feelings are mixed into the decision and coordination may succeed.
Notes: Here are you have read it Importance with Techniques of Coordination, last post you might be read it; Principles of Coordination. And, Maybe You will read it; The definitions of all the Seven Processes of Scientific Management; Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling.
Principles of Coordination; First. Some Discuss Coordination – The effectiveness of a system relates to its ability to fulfill its functional requirements. When a system consists of a set of collaborating agents, the overall performance may depend more on their ability to work together than on optimizing individual behavior. The goal of an agent is often at odds with the interest of the collective. The limitations of centralized control for complex systems suggest the need for decentralized coordination. This can achieve by having each agent take explicit account of the cost of engaging in an activity as well as a measure of reward for competent behavior.
Here are Explains, What are the Principles of Coordination? 10 types of Principles.
The consideration of payoffs and penalties leads to an economic perspective of multi-agent systems. In consequence, it is possible to draw on previous work in diverse fields, ranging from game theory to welfare economics and social policy. The promise and limitations of the explicit valuation approach examine. To illustrate, the behavior of collaborative systems can interpret in terms of games of strategy; this approach permits a better understanding of the conditions for globally optimal behavior, as well as strategies for their attainment. The notions of agents and the explicit valuation of action are versatile concepts. One indication of the versatility lies in the fact that these concepts cover as a special case the idea of genetic algorithms as a mechanism for learning systems.
Now, Here are Principles of Coordination;
Simplified organization:
Authority, responsibility, duty, and other job descriptions should clearly describe by the organization. Also, Coordination may be simple and easy when all duties and power simplify.
Harmonized programs and policies:
An organization must set the programs and policies. These programs and policies must harmonize. Harmonized policies help to make coordination effective.
Well, the designed system of communication:
Without effective communication coordination and harmonizing activities is not possible. Therefore, the communication system must well design.
Voluntary cooperation:
Are voluntarily cooperated when all behave voluntarily cooperated, then only coordination can be successful.
Coordination through supervision:
Supervisors are the most important actor to coordinate the workers and their work. Mainly in all organization supervisors coordinate the resources and activities.
Continuity:
It is a never-ending process. When it is done continuously, the resources are not used effectively and they cannot contribute.
Direct contact:
Direct contact is necessary for effective coordination. Face to face contact may provide more effectiveness. Direct personal contact removes misunderstanding and conflict between departments or between personnel. It involves direct face to face communication, personal discussion, settlement of differences, exchanges of ideas between the personnel.
Clearly defined goals:
Organizational goals and other departmental goals must clearly define otherwise it isn’t easy to coordinate the resources and activities.
Effective leadership:
Leadership must be effective. As well as, It helps o increase the confidence of employees and it develops the morale of workers. Also, Effective leadership helps ineffective coordination.
Continuous Process:
Coordination is a continuous process and must go on all the time. In contrast to the principle of continuity, the difference of opinions and information gap may appear and misunderstanding in interdepartmental operations may crop up in the absence of coordination. By keeping the process of coordination as a continuous flow of information, sound coordination can be ensured in an enterprise.
Notes: Here are you have read it Principles of Coordination. And, Maybe You will read it; The definitions of all the Seven Processes of Scientific Management; Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling. You will be reading this post about; What are the Functions of the Organization. Do you read it What is a Management and Organization?, Next Notes of Article Importance with Techniques of Coordination.
Explain is, What are 14 Principles of Organization?
MeaningofOrganization: “An organization or organisation is an entity comprising multiple people, such as an institution or an association, that has a collective goal and is linked to an external environment”. A group of people, the structures in a specific way to achieve a series of shared goals. Relationships within an organization are determining by its structure and are typically based on role and function. As the external environment can affect, and affected by organizations, they are considering open systems. Also learn, 14 Principles of Management by Henri Fayol, 14 Principles of Organization!
Now, here are Fourteen types Principles of Organization!
Organizational goals, departmental goals, and individual goals must be clearly defined. All goals and objectives must have uniformity. When there is contradiction among different level of goals desired goals can’t achieve. Therefore, the unity of objectives is necessary
II. The principle of specialization:
Sound and the effective organization believes in an organization. The term specialization is related to work and employees. When an employee takes the special type of knowledge and skill in any area, it is known as specialization. The modern business organization needs the specialization, skill, and knowledge of this desired sector of the economy and thus, efficiency would establish.
III. The principle of coordination:
In an organization many types of equipment, tools are using. Coordination can obtain by group effort that emphasizes on a unity of action. Therefore, coordination facilitates several management concepts
IV. The principle of authority:
Authority is the kind of right and power through which it guides and directs the actions of others so that the organizational goals can achieve. It’s also related to decision making. It is vesting in a particular position, not to the person because authority is given by an institution and therefore it is legal. It generally flows from higher level to lowest level of management. There should be an unbroken line of authority.
V. The principle of responsibility:
An Authentic body of an organization is top-level management, top-level management direct the subordinates. Departmental managers and other personnel take the direction from top level management to perform the task. Also, Authority is necessary to perform the work .only authority is not provided to the people but the obligation is also provided. So the obligation to perform the duties and task is known as responsibility. Responsibility can’t delegate. It can’t avoid.
VI. The principle of delegation:
A process of transferring authority and creation of responsibility between superior and subordinates to accomplish a certain task is called delegation of authority. Authority is only delegated, not responsibilities at all levels of management. The authority delegated should equal to the responsibility
VII. The principle of efficiency:
In the enterprise, different resources are using. Therese resources must use in an effective manner. When the organization fulfills the objectives with minimum cost, it is effective. The organization must always concentrate on efficiency.
VIII. The principle of unity of command:
Subordinates should receive orders from the single superior at a time and all subordinates should be accountable to that superior. More superior leads to confusion, delay and so on.
IX. The principle of the span of control:
Unlimited subordinates can’t supervise by the manager, this principle thus helps to determine numerical limit if subordinates to supervised by a manager. This improves efficiency.
X. The principle of balance:
The functional activities their establishment and other performances should balance properly. Authority, centralization, decentralization must balance equally. This is a very challenging job but efficient management must keep it.
XI. The principle of communication:
Communication is the process of transformation of information from one person to another of different levels. It involves the systematic and continuous process of telling, listening and understanding opinions ideas, feelings, information, views etc, in the flow of information. Effective communication is important
XII. The principle of personal ability:
For the sound organization, human resources are important. Employees must be capable. Able employees can perform higher. Mainly training and development programs must encourage to develop the skill in the employees
XIII. The principle of flexibility:
Organizational structure must be flexible considering the environmental dynamism. Sometimes, dramatically change may occur in the organization and in that condition, an organization should be ready to accept the change
XIV. The principle of simplicity:
This principle emphasizes the simplicity of organizational structure, the structure if the organization should be simple with a minimum number of levels, so that its member and understand duties and authorities.
Notes: Here are you have read it 14 Principles of Organization. And, Maybe You will read it; The definitions of all the seven Processes of Scientific Management; Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling. you will be reading this post about; What are Functions of Organization, do you read it about Organization.
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First, we will understand What is an Organization? Just same knowledge remembering for more understandable How to Principles of Organization use it or work it in your organization employees.
“An organized group of people with a particular purpose, such as a business or government department.”
“The action of organizing something. The quality of being systematic and efficient.”
“The way in which the elements of a whole are arranged.”
Here are Principles of Organization
The principle of definition: Defining and fixing the duties, responsibilities, and authority of each worker. In addition, when a group of persons is working together for a common goal, it becomes necessary to define the relationship between them in clear terms.
The principle of objective: The activities at all levels of organization structure should be geared to achieve the main objectives of the organization.
The principle of specialization or division of work: It includes deciding and division of various activities required to achieve the objectives of an organization. Identical activities are grouped under one individual or one department. In order to ensure effective performance, the grouped activities are allotted to specified competent persons, specialized in their fields. Adequate staff members are appointed by them and are appropriately trained.
The principle of coordination: Coordination must exist among the workers. The delegated authority and responsibility should be coordinated by the chief managerial staff. There must be a separate and responsible person to see whether all the activities are going on to accomplish the objectives of the organization or not.
The principle of authority: Assignment of duties or allotment of duties to specified persons is followed by the delegation of authority. While delegating authority, responsibility is also fixed. The senior members should delegate the authority to their subordinates on the basis of their ability. The subordinates are motivated through the delegation of authority and they perform the work efficiently with responsibility.
The principle of responsibility: Each person is responsible for the work completed by him. Authority is delegated from the top level to the bottom level but the responsibility can be delegated to some extent. While delegating the authority, there is no need to delegate the responsibility. So, the responsibility of the junior staff members should be clearly defined.
The principle of explanation: While allocating duties to persons, the extent of liabilities of the person should be clearly explained to the concerned person. It will enable the person to accept the authority and discharge his duties efficiently.
The principle of efficiency: Each work can be completed efficiently wherever the environment, as well as the organizational structure, facilitates the completion of work. The work should be completed with minimum members, in less time, with minimum resources and within the right time.
The principle of uniformity: The organization should distribute the work in such a way that there should be an equal status and equal authority and powers among the same line officers.
The principle of correspondence: Authority and responsibility should be in parity with each other. If authority alone is delegated without responsibility, it could be misused. Secondly, if responsibility is delegated without authority, it will not work.
The principle of the unity of command: A subordinate should receive the instructions or directions only from one superior.
The principle of balance: Sequence of work between various units of the organization should be arranged scientifically.
The principle of equilibrium: In certain periods, some departments are overloaded and some are under loaded. The overloaded departments should be further divided into subsections. This would facilitate effective control.
The principle of continuity: There should be reoperation of objectives, readjustment of plants and provision of opportunities for the development of future management.
The principle of the span of control: It refers to the maximum number of members effectively supervised by a single individual. In the administration area, under one executive, four or five subordinates may work. In the factory level, under one supervisor, twenty or twenty five workers may work. The span of control enables smooth functioning of the organization.
The principle of leadership facilitation: The organizational set up may be arranged in such a way that the persons with leadership qualities such as honesty, devotion, enthusiasm, and inspiration are appointed in key positions.
The principle of exception: The junior officers should be disturbed by the seniors only when the work is not done according to the plans laid down. It automatically reduces the work of middle level as well as top level officers. The top level officers will have more time to frame policies and chalk out the plans of the organization.
The principle of flexibility: The organizational set up must be flexible to adjust to the changing environment of the business.
The Scalar principle: The line of authority flows from the top level to bottom level. It also establishes the line of communication. Each person has to know as to who is his superior, from whom he has to receive orders, and to whom he is answerable. Each superior must know what authority he has and over which persons.
The principle of simplicity and homogeneity: The organization structure should be simple. It enables the staff members to maintain equality and homogeneity. It is necessary to understand a person who is working in the organization. If the organization structure is complex, junior officers will not understand the level and the extent of responsibility for a particular activity.
The principle of unity in direction: The major plan is sub-divided into sub-plans which are taken by groups or departments. All these groups have to cooperate to attain the main objectives by implementing a major plan.
The principle of joint decisions: In the business organization, there are a number of decisions taken by the officers to run the business. If a complicated problem arises, more than one member examines the problems and takes decisions. Whenever the decision is taken jointly, it gives a benefit for a long period.
Notes: Here are you have read it Principles of Organization. And, Maybe You will read it; The definitions of all the seven Processes of Scientific Management; Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling. You will be reading this post about; What are Functions of Organization, do you read it about Organization.
