N221 Business Management : Employment Assessment Answers

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Task 1 covers: LO1: Explore and illustrate the range of venture types that might be considered entrepreneurial and LO2: Assess the impact of small businesses on the economy.

Explain the importance of small businesses and business start-ups to the growth of the social economy. Describe the economy of the UK and the importance of to society. P4

Answer:

Task 1:  Range of Entrepreneurial Venture Types and Impact of Small Businesses on the Economy

An Entrepreneur is an innovator who starts a new business and runs it with limited resources (Drucker 2014). They do not use existing model of a business. Entrepreneurial ventures are business enterprises that have a high level of risk as well as high return target (Aldrich and Yang 2014). Entrepreneurial ventures are different from small business firms in terms of growth, number of employees, profitability risk, innovative products and impact on economy (Brooks et al. 2014). In order to identify the entrepreneurial ventures certain strategic behaviour of the business needs to be examined. Few characteristics of such behaviour are: new product introduction, new method introduction, new market opening and industrial reorganization. Entrepreneurial typology is the classification of entrepreneurial ventures based on certain classification (DeTienne, McKelvie and Chandler 2015). The first category for dividing the ventures into different groups is the potential of growth. First type of ventures is the one which has a potential for high growth (Coad et al. 2014).

There are several reasons why small and micro businesses are important for the social economy. They have a huge expansion potential (Morris, Neumeyer and Kuratko 2015). Smaller businesses are comparatively more productive than well renowned large organizations. Smaller firms employ more number of engineers, scientists. This increases the productivity in the area of engineering and science (Goss 2015). The employment opportunities increase with the growth and development of small and micro industries. This improves the level of employment in the economy (Burns 2011). In small business environment, the employees get the chance to interact with the customers and know about their needs. This increases the chance of innovation (Down 2010). This is why most of the innovative workers prefer to work in small enterprises. Small businesses always do not remain small and can one day turn into one large enterprise. Small businesses have a strong adaptability (Bridge and O'Neill 2012). They have few loyal customers which mean that they are able to stay strong even during tough times. All these reasons lead to the growth of the social economy. The development of new ventures in UK has become like a social movement. Start-ups are sprouting out almost on a regular basis (Ward and Rhodes 2014). The rate of developing new businesses are increasing at a fast pace. The turnover of small and micro businesses was 1.6 million pounds in the year of 2014. This was 47 per cent of the total turnover of the private sector. The job opportunity provided by such businesses were 60 per cent of the total employment provided by the private sector. It was reported that 37 per cent of the innovative activities are contributed by the small and micro businesses. Between the year of 2009 and 2013 there was an increase in the number of micro and small businesses by 47 per cent (Blackburn, Hart and Wainwright 2013). Small businesses, repair of motor vehicles, manufacturing and retail are the backbone of the economic activities. The revenue that generates from small business is 46 per cent of the total revenue generated by the private sector. There exists a certain relationship between UK and small businesses which proves to be mutually beneficial for the social economy of UK (Carter and Jones-Evans, 2012). The economic health of the country is strengthened by the contribution of the small and micro businesses. The importance of small businesses in Britain is increasing with time.

References:

Aldrich, H.E. and Yang, T., 2014. How do entrepreneurs know what to do? Learning and organizing in new ventures. Journal of Evolutionary Economics, 24(1), pp.59-82.

Brooks, A.W., Huang, L., Kearney, S.W. and Murray, F.E., 2014. Investors prefer entrepreneurial ventures pitched by attractive men. Proceedings of the National Academy of Sciences, 111(12), pp.4427-4431.

Burns, P (2011) Entrepreneurship and Small Business. 3rd Ed. Basingstoke: Palgrave MacMillan.

Drucker, P., 2014. Innovation and entrepreneurship. Routledge.

Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.

Morris, M.H., 2015. Entrepreneurship as Experience. Wiley Encyclopedia of Management.

Morris, M.H., Neumeyer, X. and Kuratko, D.F., 2015. A portfolio perspective on entrepreneurship and economic development. Small Business Economics, 45(4), pp.713-728.

Ward, M. and Rhodes, C., 2014. Small businesses and the UK economy. Standard Note: SN/EP/6078. Office for National Statistics.

Wright, M. and Stigliani, I., 2013. Entrepreneurship and growth. International Small Business Journal, 31(1), pp.3-22.