Management skills and entrepreneurship

In recent years, there have been a surprisingly increasing number of small businesses in over the world, which also create a numerous young millionaire. This in turn attracts and inspires nearly one million MBA applicants every year (Statistic Brain, 2013). However, the path to outstanding success is always arduous and demanding, in fact, a half of starup businesses fail after year 4 (Statistic Brain, 2014), and only a quarter of employers have sufficient ability to lead their company in more than 15 years (Nazar, 2013). While there is a mere possibility of failure involving disasters or fraud, the primary causes emanate from the leaders’ proficiency Sometimes the manager of the small business does not have the capacity to operate it successfully. The owner lacks the leadership ability and knowledge necessary to make the business work

Table of Contents

Part A: Essay 5

Introduction 5

Small business model 5

Failure in small business 6

Leadership 8

Knowledge 9

The model entrepreneur 10

Conclusion 12

References 12

Part B: Business Plan 15

1 Executive summary 15

2 Business description 15

2.1 Goals 15

2.2 Product and service description 15

2.3 Supplier information 16

2.4 Ownership structure 16

2.5 Legal considerations 16

3 Business opportunities 17

3.1 Potential customer 17

3.2 Geographical area 18

3.3 Business competitor 19

4 Marketing strategy 20

4.1 Costing 20

4.2 Pricing 21

4.3 Sale projection 21

5 Marketing Plan 22

6 Human resources Strategy 23

7 Business operation 24

8 Financial plan 25

8.1 Break even analysis 25

8.2 Projected profit and loss 26

9 Conclusion 26

10 Reference 26

11 Appendices 28

Appendix 1: Number of new cancer and deaths in South-Eastern Asian countries in 2012.28 Appendix 2: Start up requirement 28

Appendix 3: Fee paid for the company representative 29

Appendix 4: Calculation of cost of goods sold 29

Appendix 5: Break – even Analysis 30

Appendix 7: Business Plan Presentation 30

List of Figur

Figure 1: The ingredients of failure 6

Figure 2: The integrations between ingredients 7

Figure 3: Failure and Suggestion 7

Figure 4: Vidatox® 30CH 15

Figure 5 : Estimated number of new cancer and cancer deaths every year 18

Figure 6: The Sunshine location 19

Figure 7: Vidatox® Plus Image 19

Figure 8: Promotional mix strategy for The Sunshine 23

Figure 9: Organisational Chart 25

Figure 10: Break even Analysis 25

List of TableY Table 1: Analysis of competitor Strengths and Weakness 20

Table 2: Startup Expense 21

Table 3: The expected price of a package of 12 bottles 21

Table 4: Sales projection Year 1-5 22

Table 5: Manpower plan 23

Table 6: Profit and Loss Calculation 26

Part A: Essay

Introduction

In recent years, there have been a surprisingly increasing number of small businesses in over theworld, which also create a numerous young millionaire This in turn attracts and inspires nearly

one million MBA applicants every year (Statistic Brain, 2013) However, the path to outstanding

success is always arduous and demanding, in fact, a half of star-up businesses fail after year 4

(Statistic Brain, 2014), and only a quarter of employers have sufficient ability to lead their

company in more than 15 years (Nazar, 2013) While there is a mere possibility of failureinvolving disasters or fraud, the primary causes emanate from the leaders’ proficiency

“Sometimes the manager of the small business does not have the capacity to operate itsuccessfully The owner lacks the leadership ability and knowledge necessary to make thebusiness work” (Scarborough & Zimmerer, 2006, p 27)

It is obvious that the long-term survival of a small company depending crucially on how amanager or an owner manages and controls it Yet, a company can reach a well-organized modellike a normal manager’s desire, or a stable income as a primary objective of an owner, or animpressive growth as entrepreneurs’ intention Noticeably, if a person was born to be asuccessful entrepreneur, he could be good at the other position

This questions what skills, character traits and managerial expertise are required to form asuccessful entrepreneur In order to seek the answer, the definition of small business, the reasonsfor the failure will be discussed This in turn is to understand the importance of leadership skilland knowledge to an entrepreneur, and then, the meaning of Scarborough & Zimmerer’sstatement will be clarified However, it should be noted that in the context of this discussion, theowner will be regarded as an owner-manager because of the fact that a majority of owners areresponsible for the day-to-day management of small companies

Small business model

The reasons why the management ability’s owner-managers take the considerable importancerole in a small company are its size of business model and its own characteristics There aremany different definitions of small business in term of quantitative measure, applying indifferent economies For example, according to the European commission (Commission

Entrepreneurial character External environment

Company weakness

Business decisions

Luck

Source: Bridge, S., O’Neill, K., & Martin, F.(2009)

Figure 1: The ingredients of failure

recommendation of 6 May 2003, 2003, pp 36-41), a small enterprise has from nine to fiftyemployees with a financial celling of ten million Euros turnover

Qualitatively, because of the small scale, it normally operates independently in a niche market,leading to the difficulty for the owner-manager in risk diversification (Stokes, 2002) This makes

it less attractive to investors Limited customer base, limited financial and human resources, andpersonalized management all contribute the dominant influence of owner-managers of their firm.Nonetheless, if a business fails, whether or not they should bear full responsibility because theweakness in their leadership skill and knowledge

Failure in small business

Failure in business comes from many reasons and from different perspective, failure is viewed indifferent ways However, no matter what failure is, the reasons have not changed According toBridge, O’Neill, & Martin (2009) there are 5 ingredients constitute failure as can be seen in theFigure 1

Any firm maybe faced with these

challenges, but small enterprises are more

vulnerable than others due to their own

characteristics mentioned above (Ibid) As

the dominance of the entrepreneur in the

small firm, the lack of skills in

management and administration as well as

the bad decisions still can cause a weak,

unstable structure of the company despite

of having a strong management team

Moreover, the limitation of its resource cause struggle against ever-changing marketplace

Burns (2001) argues that these four factors have a relationship with each other that is illustrated

in the Figure 3 The failure likely originates from the weak entrepreneurship combined to thedisproportionate influence of the entrepreneur

More specifically, Zimmerer, Scarborough, & Wilson (2008) listed ten reasons for businessfailure (Figure 3) All of them also are more or less relevant to the entrepreneurs’ ability andtrait Even in the case that the small enterprise growth fast, it still is a potential risk factor thatwill come out when beyond entrepreneurs’ capability A good example of this is Robert Schell,who owned Avico, providing e-consulting service Quickly, his company was one of the mostfastest-growing company and the decline was also at a rapid rate later (Daniel, 2004) Failurewas defined when he could not control the company’s managerial activity Faster growth acompany gain, greater challenges it faces

Company weaknesses

Entrepreneurial character decisionsBad

Unexpected change in environment

FAILURE

Decline

Management mistake

Lack of experience

Poor financial control Weak marketing efforts Failure to develop a strategic plan

Know your business in depth

Manage financial resource Prepare a business plan

Set your business a part from a competitor Maintain a positive attitude

Suggestions

Figure 2: The integrations between ingredients

Figure 3: Failure and Suggestion

Source: based on Zimmerer, Scarborough, & Wilson,D (2008), and Scarborough (2012).

Glenn Llopis

Forbes contributor Source: Forces (2012)

From the causes of failure in business, Scarborough (2012) highlights some solutions that helpentrepreneur survive The reasons are found down, the proposition is given as well, but long-term survival realistically still a formidable task for most owner-managers This raises a question

of whether it is because they knows what to do, but cannot afford to do As they lack of the skillsand understanding in term of their business

Leadership

“Leadership is the process of influencing others to understand and agree about what needs to bedone and how it can be done effectively, and the process of facilitating individual and collectiveefforts to accomplish the shared objectives (Yukl, 2002, chapter 1, p 7)” Obviously, leadershipskill is a fundamental need for leaders generally and managers and owner-managers particularly Although there is an argument that sometime management and leadership do not go together, theterm “manager” describes a job position with a number of people, then leading people must be aprincipal ingredient of managerial capabilities (Gillen, 2002)

When the enterprise develop to a certain size, the owner–manager cannot manage and control itsingle-handedly, hence, an entrepreneurial management team is essential for growth orientation(Stokes, 2002) This in turn further confirms the role of leadership contributing an ambitiousowner-manager, who not only needs to connect all the staff, but also his team of managers tocreate a synergy power

However, sometimes owner-managers have leadership skill, but in term of transactional style,then the development of small business cannot go further Transactional leadership is close tomanagement, regarding the smooth day-to-day operations of

business In contrast, transformational leadership function the

owner better because it is “empowering and inspirational,

resulting in changes in people’s abilities, attitude, value, beliefs

and motivation (Gill, 2011, p 87).” Thus, even managers and

owners do have their own leadership skill, this should be

varied depending on concrete situations Yet, if they really do

lacks of this skill, what will happen to the business

As Llopis (2012) shares his experience in his career, because he did not concern about leadershipdevelopment, believing in the inherited management system Consequently, he lost a money-making business relationship Luckily, he realized the mistake, building and leading his team.Eventually, he was successful with the new business relationship.

However, failure does not happen frequently because the weak leadership ability In practicemany managers or owners, who lack of this skill are managing and operating their companynormally According to a research of nearly 400 leaders in the United Kingdom in 2011, only 36percent were rated as having effective leadership in their firms (Cipd, 2011)

Knowledge

Generally, knowledge that a person gain through learning or experience is the key for any kind

of success Knowledge is the first foundation level of a successful manager Basic facts andrelevant professional knowledge facilitates leaders and manager to make good judgments(Pedler, Burgoyne, & Boydell (2006)

For example, managers with marketing myopia can force company fail to satisfy the customers’demand and adapt to the change of the marketplace Owner-manager that is in the inadequacy offinance can perform disappointingly in cash-flow management This will push the small firm indanger of a real failure due to the fact that financial control affects directly to the survival of anycompany, especially small ones (Cadden & Lueder, 2013)

Knowledge is fundamental for owners to facilitate the business activities Differing from thechief executive of a big company, the owner-manager of a small one is both of the planer andimplementator, for daily tasks as well as long term plans Hence, they are required to havegeneral knowledge of many fields such as customer knowledge, and product research anddevelopment

In the several general methods for entrepreneurs to avoid failure as mentioned in Figure 3,almost all of them in regard to knowledge to make these suggestions practically Hernaeus(2003) emphasize in the trend of globalization with the high-speed development of technology,knowledge is demanding more than ever New ideas are not insufficient but too few owner thatare qualified to develop these ideas

One thing is associated with However, it should be noted that in the reality life, many successfulentrepreneurs start their business with a very basic knowledge as normal people have

Richard Branson, the CEO group is an example He clearly did not have sufficient knowledge atthe time he started his business because of the dyslexia and very poor result in school However,after the first venture with the Student magazine and then a mail order record company, hisbusiness was expanded Now, he is one of the richest business man (Sir Richard Charles

Nicholas Branson, (2014)

Repeatedly, Richard Branson is just one of manysuccessful entrepreneurs without a college degree(Hudson, 2013) Yet, they have the vision and ideas andmotivation and they learn every day from the first-handexperience

As the discussion above, knowledge and leadership aremeaningful for the long-term business development,both are fundamental, affecting the business survival.However, one important source of the disaster forbusiness is the negative effects of entrepreneurcharacter Thus, in order to reduce the risk in businessand to be successful, an individual need to fulfill his or her entrepreneurship, which requiredboth of knowledge and leadership

The model entrepreneur

The Figure 6 is an overview of skills and characteristics that an entrepreneur need to reach thesuccess Stokes (2010) has been questioned about the importance of personal attributes to thesuccess of entrepreneur He argued that technical skills and management competencies like anecessary condition for success while the two others are the sufficient condition Consequently,entrepreneurial behaviours and characteristics decides who win the fierce competitive market.Schaper & Volery (2007) indicated that the basic requirement of an entrepreneur is motivation.Then, by using his skills and knowledge, new venture opportunities will be identified, and their

potential and their risks will be estimated (Knowledge@wharton, 2009).

There also are different approaches to entrepreneurship Burn described a set of the same fourcharacter traits of both owners and manager, and seven additional traits of entrepreneurs Heconcludes that entrepreneur are born with these certain traits, which also are impacted by thesurrounding environment Nonetheless, as defined by Scarborough (2012), entrepreneurship isnot an inborn attribute and can be learned.

However, what matter the answer is right or wrong, an individual can teach himself from failure,acquire as much as knowledge, master leadership skill, in order to approach success

Technical skill

* Product/service knowledge

* Market/ industry understanding

* Opportunity identification

* Resource leveraging

* Networking

* Effectual decision making

* Creativity and innovation

Figure 4: The building block of successful entrepreneurship

In conclusion, as Scarborough & Zimmerer said in their book, leadership and knowledge aremuch important to an owner-manager, helping them avoid management mistake as well as thedecline of the failure There is not a perfect recipe for success as well as a perfect solution toavoid failure, but success or failure is the combination of various things Amongst those, whatdistinguish between a winner and a loser in the marketplace is the personal characteristics, which

is relatively natural

Hence, although leadership ability and knowledge is the answer to the failure immediatelyflashed in most people’s mind, it is not always true, it happens sometimes as the opinion ofScarborough & Zimmerer Even though, in the way to be a successful entrepreneur, individualsmust not stop practicing, learn and motivate themselves In fact, the number of people, who are

in managerial and professional incompetence at the beginning, but become successful, justconstitute a mere proportion of the world of business

Furthermore, failure is not really an enemy, it can be considers a friend entrepreneurs meet onthe path to success This friend helps them more understand themselves, their strength andweakness, force them attempt to do better Because of this, in the perspective of realentrepreneurs, their knowledge and abilities are used more to obtain successes than to avoidfailure

Nazar, J (2013, September 9) 16 Surprising Statistics About Small Businesses Forbes.

Retrieved June 9, 2014, from statistics-about-small-businesses/

http://www.forbes.com/sites/jasonnazar/2013/09/09/16-surprising-Zimmerer, T., & Scarborough, N M (2005) Essentials of entrepreneurship and small business

management (4th ed.) Upper Saddle River, NJ: Pearson/Prentice Hall.

Zimmerer, T., Scarborough, N M & Wilson,D (2008) Essentials of entrepreneurship and small

business management (5th ed.) Upper Saddle River, N.J.: Pearson/Prentice Hall.

Scarborough, N M (2012) Effective small business management: an entrepreneurial

approach (10th ed.) Upper Saddle River, N.J Harlow: Pearson.

Bridge, S., O’Neill, K., & Martin, F.(2009) Understanding enterprise: entrepreneurship and

small business (3rd ed.) Basingstoke England: Palgrave Macmillan.

Stokes, D (2002) Small business management (4th ed) London, United Kingdom: Continuum

Burns, P (2001) Entrepreneurship and small business Houndmills, Basingstoke, Hampshire:

Palgrave

Daniel, M., (2004, October 15) Why Size Matters Inc.com Retrieved June 7, 2014, from http://

www.inc.com/magazine/20041015/why-size-matters.html

Yukl, G.A (2002) Leadership in organizations Upper Saddle River: Pearson Education

Rae, D (2007) Entrepreneurship: from opportunity to action Houndmills: Palgrave MacmillanGill, R (2011) Theory and Practice of Leadership (2nd ed.) London: SAGE Publications

Llopis, G (2012, August 20) 5 Things Failure Teaches You About Leadership Forbes.

Retrieved June 9, 2014, from failure-teaches-you-about-leadership/

http://www.forbes.com/sites/glennllopis/2012/08/20/5-things-Cipd (2011, August 31) Effective, high quality leadership lacking in UK organisations,

Gillen, T (2002) Leadership skills for boosting performance London: Chartered Institute of

Personnel and Development

Schaper, M., & Volery, T (2007) Entrepreneurship and small business (2nd Pacific Rim ed.).

Milton, Qld: John Wiley & Sons Australia

Hudson, P (2013, March 13) 100 Top Entrepreneurs Who Succeeded Without A College

Degree Elite Daily Retrieved June 9, 2014, from

http://elitedaily.com/news/business/100-top-entrepreneurs-succeeded-college-degree/

Pedler, M., & Burgoyne, J., Boydell, T (2006) A manager's guide to self-development (5th ed.).

https://www.dawsonera.com/readonline/9780077133283#

Stokes, D., Wilson N, (2010) Small Business Management and Entrepreneurship (6th ed.).South Western Retrieved 9 June 2014, from <http://www.myilibrary.com?ID=328468>

Cadden, D T., & Lueder, S L (2013) Small Business Management in the 21st Century, v

http://catalog.flatworldknowledge.com/bookhub/reader/2861?e=cadden_1.0-ch01_s02

Hernaeus, T (2013, October 29) Why knowledge in entrepreneurship and innovation is needed.School of economics and managerment Retrieved June 20, 2014, fromhttp://www.entrepreneur.lu.se/en/about/whyentrepreneurship

Knowledge@wharton (2009, November 9) How entrepreneurs identify new businessopportunities Retrieved June 20, 2014, from https://knowledge.wharton.upenn.edu/article/how-entrepreneurs-identify-new-business-opportunities/

of Vietnam, whose cancer drug market is dynamic and developing rapidly.

The Sunshine is ran with a slogan that customers are the core-value of business Owners’ desire

is to contribute a small role in the fight against cancer in Vietnam

This business plan is going to be implemented in Vietnam, however, all calculation has beenconverted in the Great British Pound, using the average exchange rate GBP/VND in June, 2014,then 1 GPB = 35,689 VND (Ukforex, 2014)

2 Business description

The Sunshine pharmaceutical company’s main goal is to provide the lowest prices for hospitalsand clinics on the market and the most reasonable prices for personal customers with the bestconsultant service We expected to reach profitability from the first year with a net profit margin

of 8.5%, and will generate over 1.9 million of sales by the firth year

The Sunshine will not to open any branch in five year, the company concentrates to specialize inone product and the best accompanying services After the year 5, if the company have arelatively strong reputation, the consultant services will be separated to a main section, providingknowledge relating to not only the product but also the cancer related information

2.2 Product and service description

Although many pharmaceutical companies try to offer a wide range

of drugs but the Sunshine only provides one brand named drug This

is Vidatox® 30CH, a cancer drug produced from venom of the bluescorpion (Vidatoxonline, 2014)

This product is a positive outcome of a research of 15 years, testing on more than 10,000 cancerpatients (ibid) The test has shown that the patients’ quality of life is improved and the tumoursgrow slower The product can be used for many kind of cancer patients to alleviate pain, andprolong survival (Labiofam, n.d) This is really a valuable aid in cancer therapy The easy usageand long expiration are other advantages of Vidatox® 30CH.

Product will be distributed mainly through treatment channel, however, customers also can buyVIDATOX® 30CH with prescription by ordering on the official website or via company’snumber contact and email The company guarantees on-time delivery and the best customer careservice

2.3 Supplier information

Labiofam, a Cuban pharmaceutical laboratory, produces Vidatox® 30CH and market thisproduct from 2012 However, in order to import the drug and sell it exclusively in Vietnammarket, the Sunshine has to work and negotiate through a Labiofam’s representative in Vietnam,namely AMV Group (Labiofam, n.d) Vidatox® 30CH has not been granted a number of drugregistration in Vietnam until now; therefore, it is an opportunity for The Sunshine

The Sunshine will be the exclusive distributer in Vietnam for Vidatox® 30CH by cooperatingwith AMV Group The Sunshine is in charge of support AMV in application for clinical trial,drug registration and circulation for Vidatox® 30CH The order quantity has to be confirmedinitially by the representative, and the fee for each importing unit paid AMV Group is in acertain rates (see Appendix 2)

2.4 Ownership structure

The Sunshine will be founded by two members, co-owning a 50% share, Mai Nguyen andPhuong Bui The total initial capital is £231,180 Mai will finish doing Master of BusinessAdministration before the company goes into operation, and Phuong has ten-year experiences inpharmaceutical industry with a bachelor's degree in pharmacy

The Sunshine is a limited liability companies and will follow the regulation under the Law on

Enterprise 2005 A profit is distributed only if the company makes profits after tax and other

financial obligations

2.5 Legal considerations

Source: Vidatoxonline (2014)

The following agreement and licences will be required:

- The company is a limited liability company with two members The capital share can betransferred to the remaining members or the third party

- Mr Phuong, who is the pharmaceutically professional manager, has been grantedpharmacy practice certificates Therefore, the company meet the conditions to get certificate ofsatisfaction of drug-trading conditions (Law of Pharmacy 2005)

- The certificate of satisfaction of drug-trading conditions from Hanoi municipal HealthServices

- The business licence from People's Committees

- The company name will be registered as a trademark and domain on the web

3 Business opportunities

3.1 Potential customer

The target market will be five hospitals, two hospitals in Hanoi and three hospital in Ho ChiMinh City Online sale system will offer a reliable address to cancer patients in Hanoi as well Generally, Vietnam pharmaceutical market is a potential market for new enterprises In the latestdecade, the annual growth was from 15% to 20% (Savipharm.com, 2010) Currently, it isincreasing dramatically, reaching nearly 17% in 2013 to over three billion dollar and is predicted

to increase 20% by 2017 (Taylor, 2014) It also growth significantly faster compared with otherAsian countries

In addition to this, the cancer drug market in Vietnam is not the exception, it also in the upwardtrend due to the fact that the number of cancer patient is increasing dramatically Vietnam is thethird biggest number of new cancer patient in the South Eastern Asia in 2012 (see Appendix 1).According to a research by International Agency of Research of Cancer (2012), the risk ofgetting cancer in Vietnam is 14, 46% The number of new cancers each year is estimated to be atapproximately 160,000 in 2020, while a number of people died by cancel also are expected toincrease rapidly

Figure 5 : Estimated number of new cancer and cancer deaths every year

0 20,000

Therefore, the Sunshine will be somewhere near the new facility of National Hanoi Cancerhospital, which is the biggest hospital and attracts biggest potential customer as well TheSunshine location is only far from the main campus of National Hanoi Cancer hospital and BachMai hospital 12 and 9 km, respectively

This location meets two requirements, economical price and convenience

Bach Mai Hospital

National Hanoi cancer hospital – Central part

Figure 6: The Sunshine location