New venture creation is the process of making a successful business, enterprise, or technology out of a new idea. The creation of the sophisticated universe, and all the complex things therein including humans, start as a little idea. According to Earl Nightingale, “everything begins with an idea”. The conceived idea can create a business that will thrive and succeed and also attract investors.
The swift growth of technology and innovation has ameliorated the possibility of new venture creation. Globalization is also playing an important role to increase the chances of venture creation in the world market. Globalization widens the horizon of venture creation and makes it go international.
Even some countries like Japan, Germany, and New Zealand have formal programs that support new venture creation. These governments give venture creation the chance to showcase their innovative and job creation capabilities. Can new venture creation ever become a success? What are the strategies that can be employed to make it a success? What are the factors to consider in making a venture creation decision? This study will give us an insight into these questions and more.
New venture creation and entrepreneurship
In the context of this case study, an entrepreneur is a person who effectively and efficiently exploits a new business idea, and venture into a new enterprise starting with limited resources. New venture creation gives an entrepreneur needed access to more resources and additional benefits.
Clarke and Cornellisen (2010) viewed entrepreneurship as a way to process economic activity and the influence the process has on economic development. The process includes the creation of new ventures with the sole purpose of highlighting the problems and the needs common to all marketplace both locally and internationally. Venture creation must establish a great value to the well-known aspect of the market and as a result, get the needed support to sustain the business.
According to Mehdivand et al., new venture creation is designed according to the conscious intellectual ability of the entrepreneur such as remembering, reasoning, and understanding. Experience, they say, is the best teacher, entrepreneurs need to have experience and proper skills needed for a clean start. Entrepreneurs must be able to look beyond the normal scope. They must see a need and have a great urge to provide for the need.
Krlev (2012) in his own opinion ascertained that entrepreneurship procedure is based on the quick identification and exploitation of the general problem and the provision of fast, lasting, and effective solutions to the problems ahead of potential competitors. New venture creation can also make use of the unique and problem-solving ability of an entrepreneur.
Entrepreneurs must have the ability to analyze and fully understand the business industry, the environment in which the business will be based, and the surrounding competitors. They must utilize a strategy that will give them development and market presence. Below are the entrepreneur strategies for new venture creation that can yield a good result.
Manufacturing- based strategy: this strategy is suitable for an already existing business. It is the upgrade made to an existing business while putting a meeting of industry-standard into consideration. The creation of innovative products and services is intended to expand a business. The strategy is effective, but it is seldom used in the creation of a new venture.
User-based strategy: This is the method that focuses on the entrepreneur's obsession with the demands and needs in a specified range. This strategy focuses on a specific market. Entrepreneurs get their consumers to narrate their needs and the entrepreneur provides answers to them.
This approach ensures that the goods produced will be of high demand and therefore slim the chances of loss due to low demand. It is a low-cost and effective method for new venture creation. It is a sort of win-win for both the consumer and the entrepreneur in the sense that the consumers will get answers to their needs and the entrepreneurs get the benefit for providing answers.
Transcendent-based strategy: this is based on the introduction of new products and services. This new venture creation strategy place an emphasis on the maintenance and the provision of quality goods and services. This method creates a new quality improvement and designs for existing goods.
Product-based strategy: This method designs the newly created venture innovatively and compellingly. It gives the consumer a sense of “must-have”. Although the venture might not be new, an example is an upgrade given to iPhones. People that have outdated versions will want to buy the upgraded version even if the outdated version they have is new.
Decision-making for new venture creation
There are three things to consider in making relevant and effective decisions in the creation of a new venture. The three things include the person creating the venture (entrepreneur), the environment, and the special strategy. The decisions made by the entrepreneur in the creation of new ventures are full of risks and uncertainties. The pulling or the kick-starting of the creation of new ventures is very risky.
There are uncertainties also in the strategy and decision-making so it takes a risk taker entrepreneur to embark on the journey of new venture creation. There is also the problem of misdiagnosing the problem and the needs of the consumers. When this happens, the entrepreneur will successfully create a useless venture. The person in charge is also at the risk of great loss.
Carefully planned decisions and a lot of backup plans are needed to make an effective decision. Below are the factors affecting the decision-making for new venture creation.
Technological advancement: almost everything is under the influence of technology directly or indirectly. The widespread usage of technology makes it a good platform for the creation of a new venture.
Opportunity and market: Entrepreneurs must be an opportunity creator and an opportunity taker. They must be able to look beyond the present scope of business and create a new enterprise where people think business cannot thrive. To be a new venture creator, there is a need to think outside the box and create a business way where there is no way.
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