Setting Up a Business and Creativity Concepts

Setting Up A Business

• The process of setting up a business involves three stages:
  • Developing a business plan
  • Acquiring finances
  • Meeting legal requirements (including ownership, registration, and intellectual property rights)
• Organizations are increasingly seeking ways to improve creativity and efficiency to gain and maintain a competitive advantage.
• Creativity can be defined as the interaction of aptitude, process, and environment leading to a novel and useful product within a social context.

Creativity

• Individual Level: Associated with being artistic, generating new ideas, and solving problems.
• Societal Level: Associated with inventions, social programs, and scientific discoveries.
• Organizational Level: Is considered a function of creative outputs from individuals and contextual effects such as organizational culture, rewards, and resources.
• A creative organization is one whose primary income source comes from generating novel and suitable ideas, processes, products, or services to address client problems or opportunities.

Types of Organisational Structures

• The Divisional Structure/ Decentralized Structure:

  • Can be organized in four ways: by geographic area, by product/service, by customer, or by process.
  • Advantages:
    • Clear accountability
    • Creates career development opportunities
    • Promotes delegation of authority
    • Leads to an internally competitive environment
    • Allows for strict control and attention to products and customers.
  • Disadvantages:
    • Duplication of functional activities
    • Can be costly
    • Requires skilled management
    • Internal competition between divisions can be dysfunctional
    • Can lead to limited sharing of resources and ideas

• The Matrix Structure:

  • A complex structure with dual reporting. It depends on both horizontal and vertical flows of authority.
  • Often used in construction, healthcare, and research.
  • Advantages:
    • Clear project objectives
    • Easy to shut down a project
    • Facilitates the use of special personnel
    • Shared functional resources
  • Disadvantages:
    • Costly
    • Violates the unity of command principle
    • Creates dual lines of budget authority
    • Requires excellent vertical and horizontal communication
    • Creates shared authority and reporting
    • Creates dual sources of rewards and punishment

The Marketing Mix (7 Ps)

• Place: Where the product/service will be sold (e.g., distance learning, online learning, or classroom).

• Distribution Strategy (Place): How the product reaches the final consumer:

  • Selective: Distributing a product or group of products in specific markets only.
  • Exclusive: A single retailer carries the product in a given market, and no other retailer carries competing brands.
  • Open/Intensive Distribution: Distributing the product line as widely as possible.
  • Direct Distribution: No intermediary.
  • Internet Marketing: Advertising, selling the actual product online.

• Promotion: How customers find out about your brand, using methods such as:

  • Advertising, public relations, sponsorship, sales promotion, personal selling, direct mail, social media, and digital content.

• People: Individuals involved in selling and supporting the service to the customer, including:

  • Advice and sales support
  • Customer service
  • Aftersales backup

• Process: How the service is delivered to the customer, including:

  • Quality assurance and quality management techniques

• Physical Evidence: Tangible proof of product presence and successful marketing, such as:

  • Packaging, paperwork (invoices, tickets, delivery notes), vehicle signage, internet/webpages, furnishings, brochures, uniforms, buildings, and awards.

Production/Operations Plan

• Is the foundation for managing business processes, scheduling events, programs, and responsibilities to achieve organizational goals and objectives.
• Defined as any activity or group of activities that transforms inputs into outputs with added value for customers.
• In manufacturing, the process starts with raw materials as inputs and transforms them into products ready for purchase.
• Benefits of a Production Plan:
  • Determines the efficiency and profitability of service delivery.
  • Allows the company to assess its capacity to deliver promised offerings.
  • Enables managers to efficiently direct material flow, utilization of people and equipment, and response to customer requirements.

Sources of Finance

• Personal savings/bootstrapping: Using personal funds.
• Family and friends: Borrowing from loved ones.
• Banks: Obtaining loans from financial institutions.
• Government-guaranteed loans: Loans backed by the government.
• Offices of economic development: Financing provided by economic development organizations.
• Finance companies: Loans from non-bank financial firms.
• Venture capitalists: Investors who provide capital to startups or expanding companies.
• Angels: Individuals who invest in new businesses.
• Grants: Financial assistance awarded to individuals or organizations.

Debt vs. Equity Financing

• Debt Financing: Borrowing money (like loans) that must be repaid with interest.
  • Advantages:
    • Lender generally has no control over the business.
    • Interest payments are tax deductible.
    • Loan payments are predictable.
  • Disadvantages:
    • Requires future repayment, or the business could face consequences.
    • Loan repayment is a constant expense.
• Equity Financing: Raising capital by selling company stock/shares to investors.
  • Sources:
    • Owners' savings
    • Shares offered to family, friends, or small investors
    • Venture capitalists or angel investors
• Venture Capitalists: Investors who fund startups or companies seeking growth.

This quiz explores the essential stages of setting up a business, including planning, financing, and legal requirements. It also delves into the various levels of creativity, from individual to organizational, and how creativity can influence business success. Gain insights into improving creativity and efficiency in a competitive market.