Entrepreneurship And Innovation Management For Globalization And Competition

Analysis

Describe about the Entrepreneurship And Innovation Management for Globalization and Competition.

Globalization and increasing number of start-ups across the world have led to increased competition in every aspect of business (Zott, 2011). Due to relaxation of international laws in business cross border sales and trade have increased and companies are now deploying variety of strategies to expand their business. However starting up or development of successful entrepreneurial endeavors requires tremendous commitment of resources and overcoming immense challenges. Research reflects that amongst start-ups success rates are low to the tune of merely 33% failing within their first six months of business, rest within the next three years fail to survive. There is a strong perception regarding luck prevailing amongst entrepreneurial mind-set in running their businesses. Successful process of entrepreneurial business initiates with the process of creating an innovative business model. The scope of this report has undertaken the case company of Campbell Soup Company (Ross, 2006). Campbell is an American canned soup company. It was established in 1869 with headquarters in Camden, New Jersey, USA. The company produces soups and various products that are distributed across 120 countries worldwide. Its products consist of soups, V8, porridge pot, baked snacks and so on. The company’s has an employee base of over 23,000 people. The entrepreneurial stages of the company is understood and its business model innovation. The essay further analyses strengths and weaknesses of the venture’s business model and the way they have developed in the future. The company was a successful food producer with aggressive acquisition and pricing strategy. The company had suffered huge losses in the year 1996 to 2000 which made the company go into a state of turmoil. The then, CEO of the company Douglas Conant helped the company recover and becoming profitable again (Dollinger, 2008). Though this is not a case of an ideal startup but the revival process can be seen in the light of entrepreneurial life cycle.    

Entrepreneurs generally innovate new ideas or ways of doing things and the execute them differently to form businesses. The most important aspect of entrepreneurial ventures lies in the execution part of their formed strategy. Execution includes three basic processes involving people, strategy and operations. Hence, an entrepreneur needs to ensure that he has a successful team who can successfully implement strategy formed by the entrepreneur (Hoy, 2006). In Campbell Soups after failing of the businesses once, the new CEO devised steady strategies targeting at company improvement, he needed to indulge in employee engagement programs. While incorporating in new and variable products of the company it needed tremendous commitment from employees which was only possible through employee engagement programs. Thus, the CEO realized the need of having an effective team for the company’s success.

Entrepreneurship life cycle comprises of five distinct stages of visualizing business opportunities, ideation and testing, business model generation, resource acquisition and management and execution. In the first stage of the life cycle an idea is generated by inspiration using various tools and techniques as mind mapping, visual thinking, and customer journey and so on (Kiron, 2013). For Campbell Soup’s this idea was centralized around improvising product quality. This poised a major challenge for the company, which was extremely difficult to attain as they had continued four years of worse performance. Belonging to the grocery sector that grows at 2% annually, the required target seemed impossible.

Once an idea is generated its goes for ideation and testing, in this stage solution to the problem is identified and formed. Returns from the food industry were based on value that investors derive from their investments. Thus, success or failure of any business was entirely dependent on its shareholders profits, in order to uplift the same the company started implementing employee engagement programs. Ideation and testing for the company began by setting continuous improvement goals for the company (Ricart, 2011).   

 

Figure 1 : Approach of Entrepreneurship & Innovation

Source : (Alexander, 2010)

The third and most vital step of the entrepreneurial cycle is Business Model Generation which is an implementation stage for the business. It requires creation of the Business Model Canvas that requires Value Chain Analysis to be applied. Business model generating is the fundamental stage for an entrepreneurial cycle and an entrepreneur should ideally develop, design and tests possible models for the business. Having various models for the business allows entrepreneurs with choice of options to test each prior to their application. While generation of innovative ideas for the business, an entrepreneur should recognize disruptive technologies, innovations (Alexander, 2010). For Campbell Soup’s business model innovation centered on creating extraordinary shareholder value. The company aimed to develop business model by being a leader in the marketplace, along with winning in its own workplace. Thus, they linked success at their workplace to create winning ambience in the external environment of the company.   

 

Figure 2 : Business Model Canvas

Source : (Vargas, 2015)

A Business Model Canvas (BMC) is a strategic management tool that entrepreneurs use for documenting their businesses. It includes company’s product’s value proposition, customer, finances, infrastructure by aligning them with their potential trade-offs. The above figure is an ideal depiction of BMC that uses key strategic resources of the firm to provide value to its customers. Campbell Soup’s business model was designed by complying with the BMC for the company (Chesbrough, 2007).

Business Model Generation

Key Activities: Its key activities in business, which includes implementing company’s value proposition as for Campbell Soup’s its value proposition was centralized on creation of soups of varying types that could satisfy the taste buds of customers and thereby increase company’s market share.    

Key Resources: These can be viewed as resources that helps create value for customers and these are assets for the company (Sharma, 2011). Campbell Soups’ CEO realized that employees are the most valued resource for the company and can initiate and help bring a change into the current business processes. Thus the key resources, being human resources once they were diagnosed, there were engagement programs for helping them execute the strategies for being an extraordinary company. Competitors of the company had high engagement ratios for its employees to derive competitive strengths for their companies as well (Drucker, 2014).

Partner Network: This proposition in the canvas helps businesses reduce risks of its business model by enhancing buyer-supplier relationship. Campbell Soup’s was focused on deriving value from its entire value chain with a widely engaged network. The CEO of the company believes that for the entire company and its processes to be innovative and extraordinary value needs to be derived from the entire value chain and not just from only products.

Value Propositions: These are collection of products to meet customers’ demands and expectations. This helps a company establish its core competency and distinguish itself from its competitors by considerable competitive advantage (Trimi, 2012). Campbell Soup’s first kind of innovation was microwaveable soups which was started in 2002 called “Soup at Hand”. This product attracted high number of customers and led the company to becoming $250 million microwaveable soup business. Second innovative product of the company was soups with low sodium content, this attracted a lot of senior buyers. They created 43 types of low sodium variety soups with the help of natural sea salt and other technology (Nguyen, 2010). This product created a buzz and ended up being another $400million product band. Then he company introduced “V8” vegetable juice and “V8 Fusion” which was vegetable juice with fruit juice. This product was very well accepted by customers as it had high health benefits associated with it and a sweet flavor that appealed to their taste buds.         

Customer Segment: Customers are the source of revenue for any type of business, hence a business needs to identify its target market segment (Kirzner, 2015). For Campbell Soup’s products was offered for all types of customers genders, income groups, age groups and geographic segments. Its soups have good taste and are a healthy snacking alternative that easily satisfy taste buds of individuals. Its further product addition helps in attending to a broader market segment. 

Key Activities

Channels: A company needs to establish relationship with its customers through a proper channel. Campbell Soups’ has an established channel for distribution of its various types of soups and juices. It markets its products by use of retail distributors, supermarkets, stores and other outlets (Johnson, 2008).

Customer Relationships: For creating sustenance for their businesses, companies need to identify relationships it wants to create with its customers segments. Campbell Soups’ engages in communities to help receive feedback from its customers. Further it has a website and email address where customers can provide feedback and any grievances for the company.

Finances: It encompasses the consequences for functioning under the specified business model. For Campbell Soup’s the primary focus was to improve year on year and to deliver returns to investors. By implementing its business plans and model it has been able to achieve 16% per year overtaking all competitors in the market (Frederick, 2007). The most important criteria for the company was to get adequate returns on the capital invested in the firm and through proper planning it has been able to achieve the same.   

Revenue Streams: It comprises of the various incomes that a company makes from each of its customer segment. For Campbell soups’ it new product developments have crated tremendous potential and market capabilities for the company enhancing its effectiveness. Thus, all such products and consumer segment helps generate revenues for the company.

Resources: Another integral step to entrepreneurial success is resource acquisition, which is critical to apply any plan and strategy for the company. Finance and other resources required by the company is integral to success of the company as in absence of any required resource, it will not be able to successfully implement its plans and strategies. Campbell Soup Company made significant amount of investment in order to revive their business. Its further investment in resources included its employee engagement programs.      

The strength of applying Business Model is primarily focus. Its design helps guide and drawing attention to the key activities of the business (Chesbrough, 2010). It also establishes concept regarding one aspects relation to the other. The other strength of Business Model includes speed and agility as its key principle focuses on quality rather on quantity. It helps determine key inputs for each building block that will help attain possible results unlike SWOT that is a filling up exercise merely. Third and most important aspect of Business Model is that it is focused on common language and helps get adequate feedback (Parker, 2006). Thus, its applicability is greater than other processes in creating business model. Hence it is centered on value proposition for the business by depicting control variables on left and relating them to market aspects to the right. Thus, for Campbell Soup’s it serves immense purpose of serving adequate resources identification for driving growth for its business. Its proposed business model has helped it grow and catered to its goals.

Key Resources

The weaknesses of Business Model are that it does not include the company’s strategic purpose. The vision, mission of the company is excluded from the model. Hence it focuses on revenue or profits as goals for the company. Secondly Business model excludes competitive notions. It ignores competition and considers internal aspects of the company on the money-making logic. Thirdly Business model mixes levels of abstraction. All nine elements in the Business model are explained at same level of aggregation compared to other elements thus certain parts receive much more emphasis compared to other parts (Stevenson, 2007). Campbell Soup’s has not nee able to define its strategic plans by the use of this model and has also excluded its competitive strategy which is a major drawback of its model.

In order to grow further the business needs to identify and adopt tools of innovation from entrepreneurial life cycle theories. Various theories of innovation suggests ways and means by which companies can further expand their capacities and grow. There are processes of innovation as open innovation and closed innovation. Further, entrepreneurs can apply lean start-up theories to apply and grow in their current businesses. Lean start-up theories is based on lean manufacturing processes and helps in reducing waste in businesses. Companies can also capitalize on Absorptive Capacity that can help recognize new innovation and help them grow. Customer Journey Mapping is another popular way of helping companies recognize ways and means to grow from their current state (Colombo, 2008).

Conclusion

Entrepreneurship is the process by which an individual forms or sets-up business. Every entrepreneur has their own sets of ideas and innovative processes. While innovation continues to be the heart of entrepreneurial processes its execution if lacks the correct essence then the whole ventures gets failed. Hence, research has a high depiction of business start-ups failing. Entrepreneurial life cycle is a step by step process that guides and entrepreneur to reach the envisioned goals of the company. In order to do so a business model is prepared, to put in papers deliverables of an entrepreneurial venture. Business Model Canvas on the other hand is a depiction all key resources and capabilities of the firm put into practice that can help deliver value propositions to customers. Case study for Campbell Soups’ provides valuable insight into various processes followed by a company to form a business model canvas and execute the same by having tremendous importance attached to them. Though there are underlying strengths and weaknesses of business model as it does not help attain to business strategic plans, but it provides a meaning direction to attaining company’s tangible benefits as profits, market share, returns on investment, revenue and so on. Thus, for future growth and development using such alternatives needs to be highly focused on the process of innovation by deploying various norms and practices.

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