MGT602 Technical Article Theme 12

Author: Marriyam Bukhari, Instructor Business Administration, Virtual University of Pakistan

Technical Articles Theme 12 · Title: The Management Aspects of an Entrepreneurial Venture · Videos: 146-151 · Topics Covered

146. The management aspects for entrepreneurial venture

Q147. Organizational Structure: How it is different from a large setup?

148. Legal form of business (Part 1)
149. Legal form of business (Part 2)

Q150. Discussion Group with a lawyer: how to register a firm in Pakistan?

151. Discussion Group: with a lawyer (How to approach ombudsman )

Management Aspects of Business Ventures

To become a successful entrepreneur, one must be good at managing the venture. The management related considerations for an entrepreneur include decision making, leadership behavior, organizational structures and processes, clusters & networks, creating resilience, technological systems, departmentalization, and HR policies.

Decision-Making is an important aspect of any business venture as entrepreneur makes decision every single hour of every single day. These decisions can be minor decisions to major strategic decisions. How these decisions are made vary from one entrepreneur to another entrepreneur? Some entrepreneurs make decisions on their own while others take the opinion of employees or other friends and family. Some entrepreneurs also rely on expert opinion to make decisions especially in case of strategic decisions. Being an entrepreneur, which decision making style you opt is an important thing which he/she should consider while operating a business venture. Leadership behavior is another important aspect of management of a business venture. Which leadership style you opt for, decides the loyalty of your employees or team. It has been observed that employees are most loyal to the organization that they stick to the same organization for 30 years if the leader is good. Organizational structure and processes are the important things to operate the firm in an organized way. In the beginning of a new venture development, the organization structures are usually blur and every employee reports to the owner. But as the firm grows, the structures must have to be clear in terms of reporting and teams. On the other hand, processes should be clear even in the beginning.

Another important aspect of a firm’s management is the Clusters & networks of an entrepreneur. Before starting a business venture, an entrepreneur must decide the industry he/she will enter. He must see if he has any networks and associations in that industry. Networking and associations with other businessmen and entrepreneurs are of utmost importance for an entrepreneur especially in the initial stages of new venture development. Being resilient and creating resilience in teams is the key to the success of any firm. Whether it is the development stage of a business venture or the growth stage, an entrepreneur can face setbacks or any uncertainties which should be faced by being resilient. In those times, it is the entrepreneur who must manage resources and make decisions which are in the favor of the firm. These setbacks can be the result of entrepreneur’s bad decisions or competitors but there are certain uncontrollable factors (like COVID 19) which can be the reason of these setbacks.

Entrepreneur must also see which Technological systems are needed by the firm. As this is the era of technology and a lot of tasks have been digitized. For these tasks, you do not need any human resource. Some business models are based on technology, so they need more technological systems than others where human capital is more important. In the initial stages of new business development, there are no separate departments for each business function. Usually, one team performs several functions. But in the growth stage of business venture, departmentalization can be a major concern for an entrepreneur. On the other hand, whether it is the initial stage or growth stage, an entrepreneur must devise the HR policies. It should be clearly decided which financial or non-financial rewards would be given to employees and when. Which type of contracts would be built with the employees and which actions would be taken against the employees who are involved in any fraudulent activities.

What is Organizational Structure?

An organizational structure is defined as “a visual presentation of a company’s structure showing what employees do, decision making style, span of control, and chain of command”. In the initial stages of venture development, organizational structures are blurred and usually all employees report to the entrepreneur or CEO. But as the organization grows, it becomes important to define the organization structures and chain of command. Organizational structures are classified in terms of functions, products, markets, and geographical location.

Functional Organizational Structure departmentalizes an organization based on the common job functions e.g., marketing, finance, human resource, management, operations and IT. It is the most common structure organizations adopt. In small scale firms, if you want to make teams, you can give responsibility to some people of marketing function and some of finance function. Usually, one team is handling two or multiple tasks. Following is the pictorial representation of functional organization structure.

Product-Based Structure divides an organizational structure based on products. It is ideal for organizations with multiple specialized products. If an organization is dealing with multiple specialized products, it can make separate teams for each product each performing all the functions of marketing, finance, research, and operations independently. For example, an entrepreneur dealing with clothing as well as beauty products can make two separate teams. Each team will do the marketing separately. Similarly, all other functions (finance, HR, research, and operations) would be performed separately by each team.

Market-Based Structure divides an organizational structure based on industries, markets, or customers. Some entrepreneurs deal with different markets like government market, consumer market, and B2B market. For those entrepreneurs, the organization structure would be market based. There will be separate teams for each market served by the firm. If a firm deals with local