Theoretical foundations of entrepreneurship

Discuss About The Pportunities Process Becoming Entrepreneur.

Entrepreneurship attracted the organizations and academia, especially the entrepreneurial orientation (EO) that states the quality of the firm through various behavioral dimensions. The one-dimensional approach of Miller (1983), as cited in management et al. (2016), is evaluated from the innovativeness, proactiveness, and risk-taking dimensions. According to Lumpkin and Dess (1996), as cited in Martens et al. (2016), the multidimensional approach adds competitive aggressiveness and autonomy.

Leitch (2006), as cited in Chell (2013), argues the high importance of investigating the skills and qualifications of the entrepreneurs. Skills are considered as multidimensional constructs that include the cognitive and emotional expression. Qualifications include the knowledge-content that could be quantified and measured. According to Darling et al. (2012), entrepreneurship is the means by which the entrepreneur could link the innovative discoveries with people needs through the filling the needs gap that, for example facilitates peoples’ life and adds to their income.

The successful entrepreneurial leadership practice is fulfilled through new creative developments. Accordingly, this report will consider Andrew Forrest as an example of a highly successful entrepreneur. He is a mining magnate, acted as the CEO of the Fortescue Metals Group (FMG) and currently, he is the non-executive chairman of the group. In 2015, Forrest was ranked the 847 on the Billionaires List of Forbes, his wealth counted for US$ 2.2 Bn. and the richest man in Australia in 2008 (Success Story, 2018).

The following section provides the theoretical foundation of entrepreneurship with an application on Andrew Forrest as an entrepreneur.

There are three main approaches that describe the individual approaching new opportunities, these approaches were produced by three leading economists Cantillon, Kirzner, and von Mises who were interested in entrepreneurship. The common goal among them is their understanding of the equilibrium goal that depends on the individual action and represents a functional approach to recognizing the entrepreneur. Cantillon views the entrepreneur as a judge maker, he assumes that the entrepreneur is an individual who works within an organized system that evolves over time and operates to achieve equilibrium. The entrepreneur coordinates between the consumers’ needs and the provided products under uncertainty conditions.

Kirzner assumes that the entrepreneur is an arbitrageur and von Mises views him as a speculator. Both of them agree that equilibrium is not a given economic condition. For Mises, the entrepreneur can create an opportunity by creating disequilibria, but Kirzner assumes that the entrepreneur identifies the disequilibria in the market. As the opportunity does exist in the marketing and the entrepreneur gathers information to discover it, he is a discoverer. Mises views the entrepreneur as the one who identifies the new opportunity through the enacting process (Kyro et al., 2011).

Andrew Forrest as an example of successful entrepreneurship

With his vision to become the new force in iron ore, Forrest he could expand his business rapidly. He was the core person in every project design since he started his business. He is considered a good observer of the market to exploit the right opportunity (World Economic Forum, 2011). Accordingly, Forster is a discoverer entrepreneur, Kirzner described this type of entrepreneurship as arbitrager that gathers information to discover.  He could create a long-term vision and rapidly expands in each project he operates. Fortescue could become a new force in iron ore in a short period of time and expand the company scale with about tenfold (World Economic Forum, 2011).

Entrepreneurial orientation (EO) is about the overall strategy-making process and strategy formulation, also the executives at organizations determine the goals of the entrepreneurial styles. EO is a behavior that gives meaning to the entrepreneurial process rather than an attribute. According to Miller (1983), as cited in Wales (2015), an organization is considered as entrepreneurial if it could engage in the innovation process, takes a risk and introduces new products and services to the customers and beat its rivals. The number of new products and services introduced to new markets is a determinant of the EO of firms. The theoretical foundation of the EO assumes that it results in improved performance and through the new entry. As the new entry is related to internal processes of the exploration of new opportunities for introducing new products and services and entering new markets.

There are various factors that supports the entrepreneurial behavior of Forrest as illustrated by Murrell (2018), as follows:

• Set a vision: Forrrest is an entrepreneur who could set long-term vision that exceeds the expectations of his Iron Ore Company, FMG. He is a simple and strong entrepreneur who could achieve his biggest goals
• Never give up: Forrest never gave up when he was faced with hard times and adversity. He focuses on deliverable outcomes.
• Innovation: Forrest uses innovation to the driveways of working smarter, efficiency and increasing productivity.
• Understanding customers: Forrest devotes high importance to customers’ needs to be able to fulfill their requirements.

The entrepreneurial process gains its meaning from the behavior of the entrepreneur as the action of the entrepreneur is the indication of his existence. Also, organizations should show their entrepreneurial behaviors on a regular basis. EO is mainly described by the organizational sustained behavior that reflects risk-taking, autonomy, proactiveness and competitiveness (Covin & Lumpkin, 2011).

For example, Forrest faced the problem of the increasing price of iron ore by Christmas with about $120 a ton. With his belief in his vision that encouraged him to increase his stake in Fortescue to $24 million despite of the failure of the labor’s mining taxes case. Also, his risk-taking behavior led him to end slavery by creating 50 thousand jobs for indigenous Australians (Harvey & Brown, 2013).

Entrepreneurs share some common features that could be discussed according to Eliadis  (2011), as follows:

• Identify a need or a problem: The entrepreneur is the ideal person to know when to create cash flow from a complex situation as he can identify and exploit the opportunity that allows him to move with sustainable success.
• Create a solution: As an entrepreneur is a natural problem solver, he can create innovative solutions that attract the attention of others.
• Create wealth by selling their solution: Entrepreneurs seek to maximize the efficiency of their operations through utilizing their cash flows.
• Demonstrate scalability: Entrepreneurs target increases in their sales volume through maximizing the production scale.
• Get investors to buy-in to their solution: The entrepreneur should create his exit plan when he designs his entry plan. He should know when to retire and sell his business.
• Transitioning from small business owner to entrepreneur is related to having the mindset of an entrepreneur who can exploit the opportunity and take the risk, unlike any other investor.

Entrepreneurial orientation (EO)

Forrest started his business in 2003 in Allied Mining and Processing, then it was renamed Fortescue Metals Group (FMG) that manages major businesses in Tongolo, Cloudbreak, Mount Nicholas and Christmas Creek. Forrest could remain the major shareholder in FMG, his privately owned company. In 2007, he could acquire Niagara Mining and expand in different industries as the medical and food industries. In 2009, he could buy back his family farmer Minderoo after a long time of hard work, as it was sold off in 1998 by his family due to debts. Due to his entrepreneurial success, he was nominated by Ernst & Young as the entrepreneur of the year (Success Story, 2018).

Forest has surprised the market when he decided to diversify his business orientation to enter the food industry through acquiring Harvey Beef the Singaporean largest meat processing business.  This acquisition was used as a tool to deliver a strong message, ensuring that Australia will be the supplier of food to meet Asia long-term security requirements. Also, he could expand Australia’s agriculture trade to the emerging markets in Asia. The acquisition was a beneficial trade tool used by Forrest to expand his business outside of Australia (Maher, 2013).

Forrest desire to end the modern slavery of isolating the indigenous people in the world did not stop by involving more than 50 thousands of indigenous Australians, as he decided to establish the Walk Free NGO in 2012 to eliminate the modern slavery in the world. The strategy of this foundation is to create a robust knowledge base to change legislation and harness businesses and faith powers in key countries by taking the initiative, Forrest could gather businesses, academics, governments and NGOs to end the phenomenon of modern slavery (Walk Free Foundation, 2018; Gallagher, 2014).

The entrepreneur is considered to be capable of attracting and building a strong team.  Andrew Forrest did not have a big staff at the beginning, as he did not have enough money to pay for it. He is a visionary entrepreneur that believed that he could achieve his biggest goals. He gave shares of his company to the staff and encouraged everyone to work towards achieving their main goal during the first turbulent years (He, 2014).

He could create a strong and highly motivated workforce and develop empowered and encouraged leaders. He could build a strong organizational culture as he believes in people and motivates them. He provides the required training to the staff as he believes it is an investment in human capital, which is critical to the successful organization. His focus is jobs and future (Murrell, 2018)

Factors that support entrepreneurial behavior

The practices of entrepreneurship emerge by trial and error. Governments have to exploit the available experiences to build the right entrepreneurship ecosystem. The private and non-governmental organizations have to assist the government in fulfilling its goals. Entrepreneurs take initiations to education, research and policy advocacy to help the governments in their role and enable them to act quickly (Isenberg, 2010).

Great achievements could be obtained when people are energized by their leaders. Entrepreneurs should make no mistakes as their plans should make sense to gain peoples’ trust. Forrest could guide the community leadership group since 2009 and assist it to succeed in its recovery process. He asked the philanthropic organization to depend on its capabilities in overcoming its obstacles and do not wait for the governmental assistant or any other organization help. Forrest encouraged them to make big aggressive goals that were transformed into a charter (Jans, 2013).

Researchers as Spinosa (1997), as cited in Hjorth et al. (2015), suggests that the entrepreneurial activity is a type of history making as it intervenes in the well-instituted firms. He argues that different factors could be applied for the opportunity to better understand the entrepreneurial activity, for example, time and temporality of an opportunity. It has the right time to be exploited and measured. It is important to the entrepreneur to decide the right time in order not to lose the opportunity. Also, the wholeness of the opportunity, as organizations, opportunities and actors are recognized for what they collectively produce.

The philanthropic approach of Forrest could not be neglected. As a visionary entrepreneur and a CEO of FMG, he could establish the first Vocational Training and Employment Centres (VTEC) to hire the Indigenous employment in FMG and its contractors in the Pilbara. He has placed the Australian Employment to hire 55 thousand of the Indigenous Australians in a period of two years. Through the Generation One establishment, Forrest and his wife in association with James Packer, Kerry Stokes and Lindsay Fox could end the disparity of the Indigenous in one generation (Jordan, 2014).

The framework of the 3E theory is based on positivist, epistemology and normal science ontology. It argues that the process of entrepreneurship starts faces uncertain and resource-restricted condition and decides to engage in the process. When the entrepreneur decides to engage, the process reaches its end when it succeeds in artifact a new market (Garud & Gehman, 2016).

orrest could overcome many obstacles, the major one is the governmental regulations and red tape. Forrest is considered an outspoken critic of the governmental excessive regulation and routine that negatively affect business in Western Australia’s regional areas in addition to the rent mining taxes imposed by the Federal Government that FMG is challenging in the High Court on constitutional grounds (Weekly Farming, 2012).

Entrepreneurial features shared by successful entrepreneurs

his study blends the theory with practice, as it highlights the different entrepreneurial approaches with an application on Andrew Forrest the mining magnet Australian entrepreneur. It assisted in deepening my knowledge with the entrepreneurial orientation and its dimensions. The three approaches to opportunity process increased my knowledge about the differences in the types of entrepreneurs and their characteristics that enabled me to judge the entrepreneurship style of Forrest. Analyzing the philanthropic orientation of Forrest enhanced my understanding of the great role an entrepreneur can do with enhancing the social activities away from the government.

It is confirmed that Forrest is an innovative entrepreneur who seeks to exploit the opportunities that assist him in achieving his greatest goals. Also, he is a high-risk taker, as he could create big visions that nobody believed it could be achieved. On the other hand, the literature on entrepreneurship argues that the entrepreneur seeks to maximize his profits and the efficiency of their operations through utilizing their cash flows. But through the analysis of Forrest entrepreneurship orientation, it is obvious that creating a big wealth is not the unique goal of an entrepreneur as the philanthropic activities that Forrest could do and its impact of eliminating the new slavery is highly recognized and respected.

It is possible to achieve big visions by taking a risk and making the right decisions at the right time to exploit opportunities. Starting with a small team that is encouraged and involved in the business as shareholders could make great achievements in the future and sustains the business. Unlike other entrepreneurs who make an exit plan and sell their business at the end of his life cycle as an entrepreneur, Forrest could maintain his business and become a billionaire and among the richest businessmen in Australia.

Conclusions

There are three main approaches that describe the individual approaching new opportunities, judge maker, discoverer and enacting. Forrest is considered a good observer of the market to exploit the right opportunity is a discoverer entrepreneur. Kirzner described this type of entrepreneurship as arbitrager that gathers information to discover. Fortescue could become a new force in iron ore in a short period of time and expand the company scale with about tenfold.

EO is a behavior that gives meaning to the entrepreneurial process rather than an attribute. EO involves major three aspects of an entrepreneur represented in innovation, risk taking and introduction of new products and services to the customers.

The role of trial and error in entrepreneurship

The entrepreneurial process gains its meaning from the behavior of the entrepreneur as the action of the entrepreneur is the indication of his existence. The entrepreneurial activity is a type of history making as it intervenes in the well-instituted firms. It is important to the entrepreneur to decide the right time in order not to lose the opportunity. Forrest desire to end the modern slavery of isolating the indigenous people in the world did not stop by involving more than 50 thousands of indigenous Australians, as he decided to establish the Walk Free NGO in 2012 to eliminate the modern slavery in the world.

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