Introduction
Launching a new company is a challenging task and requires careful consideration of the product features, positioning strategy, and development opportunities. John and Quincy want to establish a sustainable business that offers customers an environmentally friendly option of powering their homes. The five models of entrepreneurship outline a multidisciplinary explanation of factors that enable the establishment of new ventures. This paper aims to examine the five theories in the context of Quincy and John’s idea and provide an assessment of hurdles that they may encounter.
Theories of Entrepreneurship
The five theories describing entrepreneurship aim to explain this phenomenon from different perspectives. From the opportunity-based theory’s perspective, John and Quincy are using the current advancement in technology, such as the ability to develop small power sources for residential homes, and changing consumer preferences, which in this case are connected to sustainability and green energy development. Drucker introduced this approach, and it outlines the exceptional capability of people who are establishing a company to see new market opportunities and apply them (Kuratki, 2017).
Therefore, their actions are facilitated by changes in other fields, such as technology, because the developments of scientists and engineers make it possible to employ power sources other than traditional ones. Solow argues that over 80% of the economic growth is facilitated through the introduction of new technology, which emphasizes the importance of utilizing market opportunities as illustrated in the case of Quincy and John (as cited in Acs, Estrin, Mickiewicz, & Szerb, 2018). Therefore, this theory provides an assessment of an important characteristic that entrepreneurs have – an ability to see and use new developments by establishing companies.
Another important aspect of this new business is the willingness of consumers to invest in independent power sources. Unarguably, people will want to consider the economic implications of this solution, that is, whether they will be able to save money on electricity bills and avoid sudden blackouts in emergency cases. However, the preferences of customers are also a significant predictor that has to be considered when developing a new product. Mittal and Krejci (2017) state that limited quantities of fossil-based fuels are shifting the focus of the energy sector towards renewable sources, which is a much more sustainable approach. Environmentally conscious consumers are aware of this issue and choose products that target the subject in question.
Economic entrepreneurship theories are connected to the economic conditions in a state that determine access to resources and customer’s ability to purchase goods. For instance, the classical approach emphasizes free trade and competition (Kuratki, 2017). However, it was criticized, and the neo-classical and Austrian Market Process (AMP) models emerged to bridge the gaps between theory and actual entrepreneurship.
AMP argues that entrepreneurship is the primary factor that facilitates the growth of the market (Lawal, Worlu, & Ayoade, 2016). The neo-classical approach states that entrepreneurship is not limited to a simple exchange of goods and money, and is a more complex system. While these theories are viable, they offer little insight into the question of why Quincy decided to leave his well-paid job as a real estate agent and begin working in a different industry. A more comprehensive approach that considers the environment and personal characteristics of a person can provide an understanding of this issue.
The psychological theory targets the specific traits that an individual has, allowing him or her to become an entrepreneur. Based on this approach, an individual has to have a particular set of characteristics that will allow the hive to notice a market opportunity, establish a company, and guide it to success. Tolerance for ambiguity, risk-taking, and the ability to innovate are thought to be the major determinants of one’s entrepreneurial future (Kuratki, 2017).
One model that is part of the psychological theory is the locus of control, according to which the perception of events has a significant impact on a person’s entrepreneurial ambitions. This can provide an understanding of why Quincy chose to become an entrepreneur since his environment and perception may have shaped a vision that emphasizes the need to be innovative. In his current position as a real estate agent, he would not be able to achieve that.
The sociological theory implies that the social context matters when determining whether a potential entrepreneur will choose to start a company or not. There are four levels of analysis within this approach; one of them focuses on networks allowing an individual to build relationships and make connections that can predetermine the success of his endeavor. Quincy and John’s colleges, friends, and family members may have affected their desire to become entrepreneurs and develop an environmentally friendly product.
The anthropological theory is connected to the development of the community and incorporates essential elements such as customs, beliefs, and origin. Stuetzer et al. (2018) offer support to this theory arguing that the context matters when evaluating entrepreneurial efforts. Therefore, the context or environment in which a prospective entrepreneur life has to be considered when assessing the idea (Kuratki, 2017).
Within this theory, the cultural model was developed, arguing that an entrepreneur establishing a firm is significantly affected by his culture. In the case of Quincy and John, it can be concluded that they live in a society that is driven by innovation and economic growth has a significant impact on their life choices. Also, the actual decision of Quincy to leave his successful career as a real estate agent and pursue entrepreneurship can be facilitated by the culture of entrepreneurship in the US. According to Buhanan (2015), approximately 27 million US citizens have started a business. This fact is significant because in a developed economy, finding a stable job with a good salary is easier than establishing a firm and attempting to gain a significant market share.
The resource-based theory views access to financials, human capital, and social resources as the primary elements that facilitate the ability of entrepreneurs to innovate and create companies. From the perspective of the case, Quincy has earned some capital while working as a real estate agent and he has his brother John as part of the team. It is unclear, however, whether either of them possesses the necessary engineering skills and knowledge for constructing the energy source. This theory is similar to the opportunity-based model because both emphasize the novelties. However, the resource-based view assesses the actual ability of an entrepreneur to access the necessary capital.
Initial Hurdles
Unarguably, establishing a business is a challenging task and will require significant input from both John and Quincy. Since there are two positioning strategies, the first issue is in choosing one that will be suitable for the current market demands (Nalca, Boyaci, & Ray, 2018). Also, this will predetermine the marketing plan and manufacturing because the products from the two strategies differ.
Wang (2016) argues that green brands selling sustainable products choose a different path of marketing, either emotional or functional, based on the target audience. In the case of John and Quincy, the functional strategy is more viable, and to introduce it to the market they will have to conduct research regarding the economic and environmental benefits of their power supply system. The two men will have to find a source of funding that will allow them to invest in the development of the products. Next, from a legal perspective, Quincy and John may choose to obtain a patent for their power supply product, which is both a costly and lengthy process. However, if avoided, they risk losing their competitive advantage if other companies can replicate their device.
Additionally, the two have not yet established how their products will be sold, which is an essential aspect of the launch strategy. Having a clear distribution strategy is necessary to deliver the product to the consumer and although there are several options, such as partnering up with a distribution company or selling online, it is essential to determine which approach will be used. Another issue is the fact that in developed countries, it is challenging to enter the market and earn a significant share in it (Buchanan, 2015). Arguably, there are a lot of companies operating in this industry that have their market share and consumer trust. Thus, Quincy and John will have to dedicate a lot of attention to building their brand image.
Recommendations
Quincy’s strategy aims to introduce the sustainable power product to the market as initially intended, with full capabilities allowing users to power some home appliances in a fixed home setting and ultimately fulfill the energy needs of mobile homes. This approach enables targeting a more significant number of individuals because both homeowners and people using mobile houses can be interested in purchasing this product. This will require a substantial investment in marketing camping to ensure that consumers are aware of the brand’s product. However, the larger customer base will result in more revenue for the company. Additionally, Quincy and John will not have to develop another positioning strategy once they choose to enter a home power supply market, which is the case with John’s idea.
John’s approach is focused on the market of emergency and disaster power supplies, which is more familiar to the consumer. Several issues exist, the first one being that there are companies that already sell products in this market, they have sufficient resources and brand value. One can hypothesize that individuals want to purchase a reliable solution that they can trust in case of an emergency. Additionally, the overall market for emergency power supplies is smaller when compared to fixed and mobile home supplies. In general, Quincy’s idea appears to be more valid if they are able to secure the necessary resources for the development and marketing of the product.
Conclusion
Overall, based on the five entrepreneurship theories, the decision of Quincy and John to launch a company selling clean and sustainable energy source was facilitated by a variety of internal and external factors. The technological development of power supply sources, personality traits of Quincy and John, their social and cultural backgrounds, as well as resources available to them enabled the launch of their venture. Next, they will have to determine a positioning strategy, decided whether to patent their product or not, and choose a distribution model.
References
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