Essay on Entrepreneurship in the Global Environment
Basing on Stokes, Wilson and Mador (2010), and Deakings and Freel (2009), Entrepreneurship as the process of organizing the production of goods and services to meet the constantly renewed demand and receive profit, as well as a function of managing this process factually represents the force of creative destruction that acts in the market and in production creating at the same time new products and business models. In this regard we find the most appropriate American economist Joseph Schumpeter’s definition of an entrepreneur as a person who is trying to turn a new idea or invention into a successful innovation (Zimmerer and Scarborough, 2005). Indeed, a good barometer of the entrepreneurial skills of a manager is one’s reaction to the new strategic possibilities, the way one perceives innovations of other companies, one’s actions to improve the organization’s performance. Managers endowed with the talent of entrepreneurship are usually the pioneers who quickly perceive all the innovations, take a certain share of risk, and initiate radically new strategies. Further in this paper, we will discuss the entrepreneurial skills of the two prominent representatives of this class – Baron Marcel Bich, the founder of the brands Bic and Cricket, the pioneer of the market of disposable items of daily use, and Akio Morita, the founder of the Sony Corporation, one of the leaders of innovation in the electronics market.
Marcel Bich profile
Relying on Landrum’s (1993) research, Marcel Bich’s (1914-1994) career in manufacturing pens began in 1939 as he took the position of an executive sales manager at Stephens, the largest French company in this segment and the main competitor to Waterman in France, but was interrupted by the war. After its end in 1945, Bich had to fight for his well-being, and at the time together with his friend Edouard Buffard they spent their last $1000 to buy the rundown premises in Clichy, where they started producing ink reservoirs for ballpoint pens. Despite huge demand, ballpoint pen was an expensive and unreliable novelty, and that experience made Baron Marcel Bich think about creating cheap disposable pens. Therefore, the next four years he spent developing the first Bic pen improving its functionality and calculating the value of the product that would not make its owner feel sorry to throw it away (Landrum, 1993).
In 1950, Marcel Bich for the first time proposed the sample to six companies for whom he produced ink reservoirs. One of these companies was a major and respected US firm Waterman, which Bich later acquired. He gave these firms the opportunity to be the first to introduce his idea, paying his company only the royalty but they refused to take risks saying that he did not understand the specificities of the complex global distribution system. Bich had to choose one of three options: to forget about his idea; to produce the product on his own and sell it through small distributors; or start his own company to produce pens and arrange his own distribution system. As a true entrepreneur, Marcel Bich decided to create his own business, and since then the way people write in the world changed forever.
Having set the price for a disposable ballpoint pen at 29 cents, while the prices for pens of the rival firms ranged between $9 and $12.95, the company achieved astonishing sales in the first 3 years distributing 200,000-250,000 pens per day. By the mid-1960’s Bich was producing more than a billion pens a year, and managed to reduce safely their price to 10 cents. Acquisition of Biro-Swan, Bellograf and Waterman Pen helped the company to reach the British, Australian, New Zealand, Canadian, and American markets where Bich introduced his extensive distribution network. For example, in the United States, he created 300,000 retail outlets, representing 93% of all retail sales in the US, and thus captured 60% of the market in the United States (Landrum, 1993).
Later, Marcel Bich extended his success in pens to lighters and shavers, leaving behind in this segment such large competitors as Gillette, and now is trying to introduce a one-off perfumes. Today, Societe Bic sells over three billion ballpoint pens a year (one million per day in the United States alone) and dominates the market for pens and lighters in most countries of the world (BIC Official Website, 2014).
Akio Morita profile
The man of the same era, Akio Morita (1921-1999), a brilliant representative of a completely different industry and culture of doing business, who nevertheless also stands at the origin of a large innovation. Studying electronics from an early age, Morita wanted to establish a company that would prove it belonged to firms that create innovative products. In 1947, Ibuka, Maeda and Akio Morita became partners and founded the Tokyo Telecommunications Engineering Corporation (SONY since 1958) with a capital of $500 (Morita, 1986). Their first product was a device for cooking rice. They produced one hundred pieces but did not sell a single one. A similar case was their first Japanese tape recorder (Collins and Porras, 2004). The company was close to bankruptcy, and the reason was that they knew how to design and manufacture products, but had no idea how to sell it. And here is when Akio Morita’s entrepreneurial skills revealed themselves.
Having taken over the department of foreign trade and marketing at Sony, Morita personally did not invent a single product. His contribution was the innovative market strategy and discovering the potential market opportunities. Thus, Morita was an advocate for Sony’s pocket-sized radio (the first to be fully transistorized), the first transistor television in the world, the first home video recorder, and surely, the world’s first portable music player Walkman introduced in 1979 (Collins and Porras, 2004). With 75 different versions and more than 20 million users, the Walkman became one of the most famous products of the company, despite the fact that when the company’s engineers conducted the first research, they concluded that people would not buy this device because it lacked recording function and just played music (Morita, 1986; Collins and Porras, 2004). Intuition told Akio Morita that his product would be in demand. Moreover, his successful marketing of the Walkman managed to introduce the idea of “Japaneseness” into the global culture, which since then became synonymous with product miniaturization and application of latest technologies (Collins and Porras, 2004).
Since 1960, Sony has been the first to implement new ideas in virtually every segment of the consumer electronics market. This commitment to innovation made Sony the most innovative company for three decades from the 50’s to the 70’s (Collins and Porras, 2004). Following the vision of Akio Morita, the company was also aggressively expanding into the new markets. As a result, Sony annual income increased from $2.5 million in 1955 to $128.36 billion in 2014. In 2012, Sony was ranked 87th on the Fortune Global 500 List, and the variety of marketing efforts it engages make it one of the world’s largest and most pervasive corporations of all time (Sony Official Website, 2014).
Rationalization of choice
Both Akio Morita and Marcel Bich are clearly the examples of outstanding entrepreneurial skills and are worthy of recognition. Being farsighted innovators in their industries, they made their companies leaders in the market segment.
Thus, Marcel Bich is more than anyone responsible for the emergence of disposable culture. His purposeful ingenuity changed the spending habits of society and the way people use writing instruments, lighters and safety razors worldwide. His creative destruction of static markets was a brilliant innovation. Similar to BIC, Sony traditionally has been remarkable for establishing its own in-house standards for innovation in recording and storage rather than taking on those of other producers and standards agencies. Sony (alone and with partners) has brought in several of the most used recording formats such as floppy disk, Compact Disc, and Blu-ray Disc.
Precisely identifying the current needs of society, Akio Morita and Marcel Bich ignored the establishment in their quest for new and better ways. Different in their specificity, these two leaders were similar in their mentality: intuition relied on striving to achieve goals at any cost, and destruction of old patterns were part of the way to success. The deeper analysis and comparison of their management approaches are presented below.
Essay on Entrepreneurship in the Global Environment part 2
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