Entrepreneurial Activity: Art or Science?

Subject: Entrepreneurship
Pages: 3
Words: 638
Reading time:
3 min

Entrepreneurship should be considered as an art and a science. Entrepreneurship cannot exist without scientific explanations and economic theories (related to price, market structure and wages, etc.). Thus, it requires the unique and innovative application of traditional concepts and theories. As the markets change or the venture matures, the role also set shifts. To continue successfully, the entrepreneur must adjust to the emerging managerial role by learning new behaviours, such as the delegation of authority, adopting attitudes consistent with the changing role, such as becoming a mature family-owned business. Unfortunately, entrepreneurial behaviours that once were adaptive may now interfere with the changed expectations.

The resulting conflict may contribute to the downfall of the business venture. On the other hand, successful adaptation to the new role expectations can offer new benefits. One benefit is access to multiple segments of society. These different segments may offer distinct network assets that include resources, monetary (prestige) rewards, and contributions to personal growth and development. In this regard, networks become value-added contacts.

Each party to the interaction seeks to maximize outcomes, whether these be social or economic. But no participant has complete control over the reward system, so each must accommodate the other’s expectations. The result, if the interaction is to continue, must be a correspondence of outcomes. The situation has to be “win-win”, and the rewards achieved by the entrepreneur and the members of their network must exceed a psychological threshold, as well as an economic one, for the relationship to remain stable.

The “art” of entrepreneurship can be defined as the unique vision of reality and the world around us. Markets for a new venture’s product are typically not homogeneous. The idea of a market structure pinpoints this fact. Market structure is the arrangement of groups or segments of buyers comprising a total market. Notably, each segment differs from the others in the way its buyers will respond to a marketing strategy. In fact, this structure exists, for the most part, because customers in different groups have at least somewhat different market requirements. Market requirements are the benefits that buyers expect from sellers as a condition of buying. However, a logical starting point is to examine the existing channels used by competing companies with products in the generic class. Special attention should be given to identifying which types of firms compose the channel (e.g., brokers, drop shippers, wholesalers, rack jobbers, etc.) and what their normal functions are.

It is also important to know the protocol for conducting business within the relevant channels, including the normal terms of trade, special discounts and fees, minimum order quantities, lead time requirements, seasonal purchase patterns, promotional support requirements, and so on. Generally, several kinds of forecasts are important. First, forecasts of sales for an entire generic class can be made. Forecasts of horticultural plants, industrial robots, or reinforcing materials fit into this category. Second, forecasts of particular product types in the class–house plants, assembly robots, or reinforced polymers–are also useful.

Note that forecasts for a product type can be compared to those for the generic class to see the anticipated relative popularity of that product type against its competitors in the class. Third, sales of the company’s brand are essential to the evaluation of market opportunity. Further, brand sales can be compared to product type sales (this is one way to measure predicted market share) to see how effective a company’s brand strategy is expected to be. Competitive strengths and weaknesses must also be considered when selecting market targets. No company wants to enter market segments that are saturated with competitors. More often than not, the success of a new venture depends on finding market segments where the company can develop a competitive edge.