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Creativity and Business Idea

Creativity and Business Idea – Fundamentals of Entrepreneurship | Management Notes

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Concept of Creativity

Creativity refers to the generation of new ides which support in effective and efficient improvement of the performance in the organization. It can also be known as the ability of discovering the new ways through the analysis of problems and opportunities. Creativity even contributes for the introduction of new things that can create value in the society. One of the main features an entrepreneur should have is creativity. The use of creativity in the business activity helps to gain competitive advantage in the market.

That’s why, most of the entrepreneurs come up with the idea to make it work to fulfill its desired aim. In order to be creative an individual must be able to view new things, generating the new possibilities with the aim of solving the problem from different perspective.Creativity is based on intellectual power of the individual, their mental vision, their knowledge, and observation of the subject matters. In the present time of global competition there is difficult situation for maintain the survival of business. An entrepreneur must apply creativeness in its business activities for its sustainability in the market.

Creativity Process

Creativity Process

The cognitive process of transforming the old ideas into updated concepts through critical thinking and problem-solving skills is known as creativity process. Some of the steps involved in creativity process are as follows (Poudyal & Pradhan, 2020) :

  • Preparation

It is the first step of creative thinking. It requires the conceptual knowledge and information about the subject matter to be studied. The conceptual knowledge of a certain subject matter can be gained through training, education, work experience, research; which will help to enhance creativity level in an individual.

  • Investigation

After preparation, entrepreneur should develop a clear understanding of the problem, issue or situation created in business operation. In order to know the real problem and its root-cause reason, the careful observation of the activities and investigation of the process of doing work should be done.

  • Transformation

It is the process of screening the similarities and the differences among the information collected through various sources. It consists of convergent thinking and divergent thinking. Convergent thinking refers to the ability to see the similarities and the connection among various and diverse information. Similarly, divergent thinking refers to the ability to see differences among the information.

  • Incubation

In this stage, the creators be in stress to come in the conclusion in short time after collecting and analyzing the information. This occurs when the individual is way from the problem and often engage in the unrelated activity. Most of the creators appear to be idle during this phase and in such situation, they feel relief to think about the subject matter in calm way.

  • Illumination

It is the phase where creative person is able to generate new idea for the solution of the problem. It occurs at some point during the incubation stage. In this stage, all the previous stage come together for the creation of the new idea.

  • Verification

In this stage, entrepreneurs attempt to ascertain the new creativity of the thought and the action of innovation which is truly effective as anticipated. In order to validate the idea as accurate and useful, an entrepreneur should be involved in various activities such as practical experiment, pilot study, testing product, and service, etc. This contributes to solve a particular problem and grab business opportunity.

  • Implementation

Implementation is the final stage of creativity process. This stage focuses on converting the idea into reality. In order to implement the new idea into the reality, they must manage the required resources to run their activities. The entrepreneur can be recognized as the successful one when s/he becomes able to transform their creative idea into useful product and servicing by creating value to the customer.

FAQs

  1. The first step in the entrepreneurial creativity process is
  2. Preparation
  3. Investigation
  4. Transformation
  5. Verification

Ans: a) Preparation

Ideas from Trends Analysis

Ideas from Trends Analysis

In order to be successful in the market, entrepreneurs should be updated with the changing environmental trends. The study and analysis of the new trends of the market helps the entrepreneurs to identify the opportunity to generate the new ideas. Some of the trends that will help the entrepreneurs to generate new ideas for venture creation are as follows:

  • Economic Trends

Economic trend analysis will help the entrepreneurs to generate new business idea and search for new business scope. When the economic condition of the customers is strong, their purchasing power will also increase and they can experiment with the new products as well and vice versa. That’s why before generating new business idea it is necessary to know about the level of income of the targeted market.

  • Social Trends

The analysis of the social trends helps to know about the consumption pattern of the customers. Customers preferences keep on changing with the social trends like, norms, beliefs, attitude, lifestyle, etc. This changing trend contributes for the opportunity for business. Previously, people used enjoy fast food but now they are more inclined towards fast food because of their busy lifestyle.

  • Technological Advance

The pace of technology keeps on changing with the development of human creativity and innovation. The close study and observation of technological advancement helps the entrepreneurs for the generation of new business idea. It is necessary for them to have the knowledge of technological change of their field to be competitive in the market. One of the advantages of technological advancement for the entrepreneurs is; the use of cell phone, online and social network has helped them maintain direct relation with the customers, suppliers, and its stakeholders.

  • Political action and Regulatory Changes

The tremendous changes can be seen in the business activities because of the change in political and regulatory system. An entrepreneur must be aware of the legal rules and regulations before operating its new venture in the market as, legal institutions plays vital roles for directing, developing, and controlling business activities. For the success of the venture, there must be stable political environment in the country.

Common Sources of New Venture Ideas

Common Sources of New Venture Ideas

It is necessary to generate new business ideas to grab new business opportunities in the market. In order to start the entrepreneurial project, one must be able present the idea with the concern of feasibility, financially sound, social acceptance, and the ability of fulfilling the customers perspective. Some of the common sources of new venture ideas are as follows:

  • Customers

Customers are the main source of income in any business. But the preferences of the customers keep on changing and in order to maintain their loyalty towards the certain business proper research should be done to get the information of the current social trends. The information from the customers and observation through the market trends help the entrepreneurs to generate new concept and idea to promote market.

  • Market Study

 Another source of new venture idea can be gained trough market study. The information of the market can be gained through dealers, marketing agencies, market research, and other resources. The study of the market scenario will help the entrepreneurs to develop marketing strategies in order to fulfil its business objectives.

  • Distributors and Suppliers

Distributors and suppliers are the intermediaries of the market. They are one who deals with the customer in a direct way and aware with their changing wants. They are also updated with the information of the new products of the market. Their feedbacks and information force the entrepreneurs to involve in research and development work to generate new ideas.

  • Competitors

Every entrepreneur wants to stand out in the market. To be successful in the market they have to competitive. In present time, we can see competition in each and every sector. To deal with the competition and be successful in the market entrepreneurs should involve in the research activity for the development of new product that can add value in the society.

  • Personal Experience

The personal experience of an individual in a related field contributes for the generation of new ideas. Most of the successful entrepreneurs use their own experience for creating business idea with the aim of doing business in different way. They use most of their skills and experiences as important source of business idea generation.

  • Research and Development

This is another important source of new idea generation. It involves the work focusing in future business plan in the organization. Today, most of the development of the new product and ventures are the result of research and development.

Methods of Generating Ideas and Solving Problems

Methods of Generating Ideas and Solving Problems

There are various methods of generating ideas and solving problems which can be used by entrepreneurs for the formation of their enterprises. But the conversion of the ideas into business is still a challenge to the prospective entrepreneur. Here are some of the commonly used techniques for generating ideas and solving problems (Hisrich, Peters, & Shepherd, 2007):

  • Focus Group

This technique is concerned with group of individuals providing information in a structured format. An entrepreneur focuses on the discussion of the group in either a directive or a non-directive manner for the discussion of new product area. In the group 8 to 14 participants is stimulated by comments from other group members. The participants of the group can freely discuss about the topic. It is one of the best methods for initially screening ideas and concepts. It is also used for examining the individuals perceptions and experience regarding a particular topic.

  • Brainstorming

In this technique, the group of 5 to 10 people sit around the table to generate ideas in the free form of association. This method allows people to be stimulated to greater creativity by meeting with others and participating in organized group experiences. In the initial stage of brain storming members of the team motivate to generate new ideas among each other. After that, every one focuses on the ideas to solve a specific problem. The session of this technique is facilitated by the team leader. The final solution of the problem is done through all the members consent.

  • Problem Inventory Analysis

This method is used for obtaining a new ideas and solutions by focusing on problems. In order to generate new product idea it uses individuals in a manner that is analogous to focus group. For this purpose, consumers are provided with list of problems in a general problem category. After that they are asked to identify and discuss products in this category that have the particular problem in terms of, Psychological, sensory i.e. taste, activities, buying usage.

  • Checklist Method

In this method, a list of idea is developed through a list of related issues or suggestions. It helps to generate ideas in a systematic way. In the beginning when a problem is identified in the organization’s activity, a team is formed for suggestion to solve the problem. After that, team members develop list of issues to solve problem and if required they develop questions as well. In the final stage, team members prepare a report accumulating all the issues and solutions of a problem for the submission to the management. This method is mostly used for developing new ideas on a specific area of idea.

  • Free Association

It is one of the simplest and effective method to generate new idea. In this method, first a word or phrase related to the problem is written down another and another with new word is developed. It attempts to add something new to the ongoing thought process, and creates a chain of idea ending with a new product idea.

  • Forced Relationship

This technique is the process of forcing relationship among some product combinations. In this technique, new ideas are developed by looking at production combinations which are not related to each other. It consists of comparing and contrasting a product with something completely different. This combination of contrast helps to generate new value to customers.

  • Collective Notebook Methods

This is the method of developing a new idea by group members regularly recording ideas. In this method a small notebook that easily fits in pocket is distributed to the participants. then they consider the problem and its possible solutions., recording idea at least one but preferably three times a day. This is the technique which can be used with a group of individuals who record their ideas and summarize it with the central coordinator.

  • Attribute Listing

This method is an idea of finding the requirement of the entrepreneur to list the attributes of an item or problem and then look at each from a variety of view point. This method develops a new idea by looking at the positive and negative view point.

Creativity, Innovation and Entrepreneurship

Creativity, Innovation and Entrepreneurship

Creativity, Innovation and Entrepreneurship are inter-related to each other. Creativity refers to the generation of new ideas whereas innovation refers to doing new things. The combination of innovation and creativity leads to the successful entrepreneurship. The use of creativity and innovation in entrepreneurial activities helps the entrepreneur to be competitive in the market. The changes brought by the entrepreneurs in the market is through the creativity and innovative activities. They are one who have being creating value in the market. Therefore, creativity and the innovation are the major feature which an entrepreneur should have in order to fulfill the gap that have been occurred in the market.

Creativity is the important steps in their business journey which contributes the entrepreneur to generate new business idea. The entrepreneurs who has the ability of creating high levels of business idea fills the gap of the market. In similar way, Innovation focus on adding value in the society. It also response towards the change in the market (Duncan, 2021).

Innovation and creativity play a big role in for the success of an entrepreneur. An entrepreneur should not only dream about being successful. They should have the practical skills to bring their dreams and great ideas to life. The successful entrepreneurs like Elon Musk, Richard Branson, etc. always presents new and unique product in the market. This is result of their creativity and innovation in the work. That’s why, in present they are considered as the leader of the market. If any entrepreneur thinks of shining in the market as a successful business leader then s/he should combine their creativity and innovation in their work apply in their entrepreneurial strategy.

Concept of Innovation

Innovation simply refers to doing new things. It is the process where the entrepreneurs translate their business ideas into a valuable goods and services. It can also be considered as the conversion of entrepreneur’s opportunities into a marketable idea. It also contributes towards creative solution of a particular problem. Innovation is one of the vital sources of the survival of business. Innovation is one of the most important functions of an entrepreneurs. An entrepreneur most work on bringing innovation in its product and services in order to be competitive in the market. They must use the information, knowledge and experience and experience for introduction of new products, new method of reducing cost, and improvement in the product design. Innovation also suggest for the optimum utilization of the resources along with developing the new concept.

In present time, business organization must think about bringing innovation in their work to be sustainable in the market. Innovation is the vital source that can lead a business organization in the path of success. It also provides the opportunity to gain competitive advantage for the organization.

 Types of Innovation

Basically, there are three types of innovation which is based on the uniqueness of the product and services. They are (Poudyal & Pradhan, 2020):

  • Breakthrough Innovation

Breakthrough innovation is the innovation of the entrepreneurs that pushes the business of the organization to the next level. This innovation opens the markets for the organization and changes the ways where customers interact in the market. This innovation has the ability to shift the market and create superior sustainability outcomes. MRI scan, internet, airplane, automobile, etc. are the examples of the innovation.

  • Technological Innovation

Technological innovation refers to the new and improved product or process whose technological characteristics differ from its previous one. This innovation focuses mostly on technological aspect of product and services, and introduce new form of technology in the organization. Cloud computing, touch muse by Microsoft, online educational assistance program, etc. are the examples of technological innovation.

  • Ordinary Innovation

Ordinary Innovation is the innovation which comes from market analysis and is extended to make a technological innovation into a better product or service. This innovation involves a product or service which has a unique feature. It also contributes in adding extra value of product and service in the market. Adding new flavors, new structure, developing new network of distribution. are the examples of ordinary innovation.

Classification of New Products

Classification of New Products

While introducing the new products, societies the product to carry some unique features with the involvement of innovation and new idea. New product is classified from the two perspectives i.e. from consumers viewpoint and firm’s view point (Poudyal & Pradhan, 2020).

From Consumer’s Viewpoint

The new products can be classified into three categories from the customer’s viewpoint. The categories are as follows:

  • Discontinuous Innovation

The products of discontinuous innovation are unique to the customer and they need new learning to use such products. These products perform either a previously unfulfilled function or an existing function in a significantly new way. Internet facility is one of the discontinuous innovations which has altered the society’s lifestyle pattern.

  • Dynamically Innovation

Dynamically innovation products create disruption influence on established consumption pattern. Switching to liquid soap from the traditional bar soaps is the example of dynamically innovation. In this innovation, there is a change in an intrinsic feature of the product, but its consumption is done for the same purpose.

  • Continuous Innovation

Continuous Innovation products are those products where new features are added to the existing products. Change in fashion, change in package, automobile style changes, etc. are the examples of continuous innovation. This innovation can help the entrepreneurs to increase their brand loyalty.

From the Firm’s Perspective

From the firm’s perspective new product has been classified into four different categories. They are:

  • Marketing Mix

Whenever the marketing mix is modified, new product emerges. Some entrepreneurs argue regard this matter. The change in any element of marketing mix like, change in design, pricing of product, promotion of product in an unconventional way, etc. can attract the buyer and increase sales.

  • Product Modification

It is the process to change the existed product as per the preference of the customers. It involves in the improvement of the existing products by making required changes in the features, size, packing or color of the products. This change tends to increase in sales volume by changing the demand of customers.

  • Product Differentiation

It is the process used by the firm in order to distinguish its product or service from the similar ones that are available in the market. Pepsi vs. coca cola is one of the examples of product differentiation. It also identifies the qualities of the similar products that set them apart from each other.

  • Product Diversification

Product Diversification refers to the addition of new company, a new technology, a new market or a new product. It is also the form of growth market strategy. It helps to increase profitability trough greater sale volume obtained from new products and new markets. For example, manufacture and sale of sewing machines in addition to electric fans produced by a firm is a case of product diversification.

Entrepreneurial Innovation

Entrepreneurial Innovation

The process of generating new business idea and implementing it in terms of product or service for earning profit is known as entrepreneurial innovation. Its main focus is towards the interconnection between entrepreneurial thinking and innovation. It addresses critical areas for successful growth of business by involving design thinking, open innovation, business models, and financing (Poudyal & Pradhan, 2020).

There are basically five types of entrepreneurial innovation for promotion of entrepreneurship. They are:

  • Product Innovation

In product innovation, there is the involvement of the introduction of new product or service toward which consumers are not yet familiar. The entrepreneurs use their skills, intellectual ability, and knowledge to generate new products. The main reason behind the success of entrepreneurs is the use of innovation in their new product or service.

  • Process Innovation

This involves the introduction of new method or technique of product process. Product innovation facilitates for the smooth and easy functioning of production and service functions.

  1. New Market: Establishing the new market is the important area of entrepreneurial innovation. In order to open a new market, entrepreneurs should involve in market research to find out new market with new customers and new customers in existing market.
  2. Source of Material: Raw materials are required for the production of the valuable and usable products. Without raw materials production activities cannot be performed. Raw materials also play the crucial part for brining innovation in the product and services.
  3. Organizational Structure: The development of new organizational structure is a part of entrepreneurial innovation. Sometime it is necessary to change the old organizational structure into the new if the existing one does not work. The main motive behind it is to improve organizational effectiveness.

  • Opportunity Recognition

Opportunity Recognition refers to the process of identifying the opportunity created by changing environment for establishing and operating a business venture. The main motive of every entrepreneurs to gain profit from its business activities. When they identify the opportunity of profit gain they will be motivated to use their idea to run a business in a successful form. The situation of creating new product or service can be possible when an individual will be able identify the opportunity behind it. An entrepreneur must be able to understand weather their idea can meet its requirement for the opportunity or not as there is a difference between an idea and opportunity. Basically, there are three approaches which entrepreneurs can use to identify opportunities. They are; observing trends, solving problems, and finding gaps in the market place.

 According to Barringer and Ireland, an opportunity has four essential qualities (Poudyal & Pradhan, 2020). They are as follows:

  1. Attractive
  2. Timely
  3. Durable
  4. Anchored

An idea of the entrepreneurs may not reach the criteria of an opportunity. One of the main ways which they can apply recognize the opportunity is by identifying a product and services that can be able to create value in the consumer’s life.

  • Product Planning and Development Process

An entrepreneur should develop a proper plan for the development of a product. The product planning and development process involves five stages. They are; idea stage, concept stage, product development stage, test marketing stage, and commercialization. In every phase of product planning and development process, the evaluation criteria should be established. The criteria should be established to evaluate the new idea focusing the market opportunity, competition, the marking system, and financial and development factors. During this evolution entrepreneurs should be concerned with formally evaluating the idea.

The stages of product planning and development process are described below:

  1. Idea Stage: The product planning and development process starts with the generation of idea. Idea can be generated through internal sources and external sources. The internal sources of idea generation involve research and development department, manufacturing, sales person and top management, whereas external source involve customers, competitors, suppliers, etc. While generating the idea for the development of the product, an entrepreneur should determine the market, schedule the finance, and determine the needs.
  2. Concept Stage: The second stage of product planning and development process is concept stage. As soon as idea stage completes in a successful way, concept stage starts. In this stage interaction with potential customers and distributors is done after getting the positive indication from the evaluation of idea. In order to get the response of the consumers while interacting with them questionnaires are prepared focusing on market situation, their preferences, and expectations. If the response of the consumers give positive indication while interacting with them, then entrepreneur can proceed with product development stage or vice versa.
  3. Product Development Stage: In this stage, technical activities are covered involving engineering and design. In this stage, the designing and engineering team convert the product concept into the concert form of product in view of the required size, shape, design, weight, color, etc. of product concept. The decisions regarding brand name, packaging, label, etc. are also done in this stage.
  4. Test Marketing Stage: This stage involves actual launching of total marketing program but on limited basis. It mostly includes an estimate of sales, market share, and financial performance over the life of the product or service.
  5. Commercialization: This is the final stage of product planning and development. In this stage new product will be introduced in the market. Only after the successful completion of test marketing production, promotion, and marketing of the product is done. In this stage, there is the inclusion of introduction, growth, maturity, and decline.

  • E-Commerce and Business Start Up

The process of carrying the business activity through the use of electronic devices, information technology, and internet is known as e- commerce. It is the result of innovation in the information technology. E-commerce also provide an opportunity for the entrepreneurs to be creative and innovative. It also helps to bring new way of evaluation process of new business idea and the development of the market strategy. It can also increase sales volume through (Poudyal & Pradhan, 2020):

  1. Business-to-business turnover
  2. Business-to-consumer turnover
  3. Consumer-to-business turnover
  4. Consumer-to-consumer turnover

In present time, e-commerce has been increasing rapidly. It has been proved to be beneficial for small and medium-sized companies as running business through e-commerce is cost and service effective. Some of the advantages of e-commerce are as follows:

  1. It provides broader access to the customers.
  2. It bears low information cost.
  3. It bears low transaction cost.
  4. It creates platform for the easy interaction with the customers.
  5. It provides quick service.

Along with the advantages there are some challenges to overcome to make the e-commerce effective. Some of the challenges of e-commerce are:

  1. It has the security issue of website hacking, fraud, and other misleading.
  2. Sometime, it can show a technical error in the work.
  3. It has a high handling cost.
  4. There is requirement of lots of technical knowledge.
  5. It is difficult to be updated with the advancement in technology which is required in the regular work.

FAQs,

Which of the following dimensions of e-commerce security is not provided for by encryption?

  1. availability
  2. message integrity
  3. Nonrepudiation
  4. Confidentiality

Ans: a) availability

Which of the following is one of the three primary societal issues related to e-commerce?

  1. Liability
  2. Anonymity
  3. Equity
  4. Individual Privacy

Ans: d) Individual Privacy

Which of the following is not an effect that e-commerce has had on organizations?

  1. E-commerce enables smaller businesses to operate in areas dominated by larger companies.
  2. E-commerce increases the number of potential customers to whom the company can market its products.
  3. E-commerce removes many barriers for start-up businesses.
  4. E-commerce is a costly medium for increasing market share.

 Ans: d) E-commerce is a costly medium for increasing market share.

What is the first step in developing an e-commerce security plan?

  1. Perform a risk assessment
  2. Develop a security policy
  3. Develop an implementation plan
  4. Create a security organization

Ans: a) Perform a risk assessment

Most e-commerce actually takes place between businesses. what is this called?

  1. Business-to-business e-commerce
  2. Business-to-consumer e-commerce
  3. Consumer-to-business e-commerce
  4. Consumer-to-consumer e-commerce

Ans: a) Business-to-business e-commerce

What are the two most important management challenges in building a successful e-commerce presence?

  1. developing a clear understanding of business objectives and knowing how to choose the right technology to achieve those objectives
  2. having an accurate understanding of your business environment and an achievable business plan
  3. building a team with the right skill sets and closely managing the development process
  4. identifying the key components of your business plan and selecting the right software, hardware, and infrastructure for your site

Ans: a) developing a clear understanding of business objectives and knowing how to choose the right technology to achieve those objectives

Bibliography

Duncan, S. (2021, July 28). Real Business. Retrieved from Real Business: https://realbusiness.co.uk/creativity-innovation-entrepreneurship-related

Examveda.com. (n.d.). Retrieved from Examveda: https://www.examveda.com/which-of-the-following-is-not-a-dimension-of-e-commerce-security-provided-by-encryption-32717/

Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2007). Entrepreneurship. New Delhi: Tata McGraw-Hill Publishing Company Limited.

Poudyal, S. R., & Pradhan, G. M. (2020). Fundamentals of Entrepreneurship. Kathmandu: Advanced Saraswati Prakashan.

Entrepreneurial Strategy – Fundamentals of Entrepreneurship | Management Notes

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