The Role Of Resources And Intellectual Property In The Growth Of An Organization, Essay.

Managing Funds for Growth

Question:

Describe the role of resources for the growth of a company. How can you protect them and remain competitive? Discuss the management of human and intellectual resources in growing firms. How can formal and informal practices can be balanced?

The reflective study mentioned below shows the several components that are required for the form in order to grow and run smoothly. Resources plays a crucial role in the company and several intellectual resources are also required. There are several difficulties that an organization faces managing funds and intellectual properties play a major in it.

Money is the seed of money is a very famous quote stated by Smith & smith which focused on the value of funds required by the company to run (Smith & smith, 2000).  In order to expand a certain business, several strategies are taken that includes merger and acquisition, emerging markets and innovation. But these all strategies comes with the huge range of people related challenges and plenty of funds. Looking at the case of WhitCo, the company faced lots of difficulties because of the shortage of cash which led to ineffective use of resources. A company growth can be hampered by the insufficient amount of funds (Ram, 2000). Thus, funds helps an organisation to expand its activities and reach the desire goals and objectives and also maintain harmony.

Another basic example is Lars Birging. He was a guest speaker who stated that his company required an additional fund in order to diversify the product range. So, one must have enough amount of fund to remain competitive in the market and grow. Managing funds is very difficult getting finances to grow can however be an obstacle, even in cases of high demands from the market.

Balancing investment

Investment must be balanced. Complexity take place while managing the resources like problems in controlling and remain competitive. How much to invest is one of the major question which must be calculated. When a firm decides to invest huge amount, then it is very difficult to analyse each factor and reduce the risk of uncertainty. Low investment results with the risk of uncertainty while high investments results in higher demand of the product.

Lowering the risk of uncertainty

When a firm decides to invest, then it must divide the whole portion into smaller pieces. The division should be based on the importance and value. Risk can also be reduced by delaying the new investment and by optimizing the number of earnings and spending. This can easily be done by the efficient management of cash flow statement and reducing the number of days the cash is linked up with the other transactions (Churchill & Mullins, 2001).

Alternative Funding Methods

Other ways of funding

Crowd funding is one of the alternative funding method which is used widely but still confused and unstudied. It is one of the simple way to gain funds but it has lots of disadvantages as well. It decrease the flexibility because of the restriction mentioned in the product specifications. Once, I was involved in Danish Tech Challenge, and I always suggested that crowd funding should strictly be avoided on highest priority because it creates several restrictions and obligations as well. It creates obstacles in delivering the final goods to their potential customers. Let us take an example of 22cans. It is one the famous British company which was established in 2012 by a famous entrepreneur named Peter Molyneux (Mollick, 2014). They used crowd funding technique on the initial phase to attract huge number of cash. It took place on the basis of several promises and the restricted creativity as well. However, it managed to increase $750,000 on kick-starter but it failed badly to stay with their promises which further created a negative impact and at the end, Molyneux left the company (Campbell, 2015).  Once he was interviewed in the year 2015 and he stated that “I haven’t got a reputation in this industry anymore” because he relied on crowd funding rather than traditional investment (Walker, 2015).

Another alternative way to fund is by developing bootstrap methods (Bhide, 1992). This method was adopted by a famous renowned company named Apple which was founded by Steve Jobs and Steve Wozniak (Tomory, 2011).

They both used this method by maintaining their expenditures at a very minimum level and worked for growth. The self-funded growth was adopted by Apple which aimed at achieving the optimum use of resources like intellectual property rights. This can be done by two ways i.e. licencing them for profit or establishing any other usage. An example of pharmaceutical industry can be taken as an example. They uses similar intellectual drug to cure several diseases.

Intellectual property

Intellectual property plays a double role in an organization. It can work as unimportant investment as well as important investment as well in order to grow and remain competitive in the market. According to many research, it can be stated that the use of intellectual property is used in many firms in order to create growth and they are basically used by the entrepreneurs (Autio & ACS, 2010), a firm must take two major points into consideration while adopting intellectual property according to Barringer and Ireland. The first is to acknowledge if it contributes to the firm’s competitive advantages and the next one is to know and analyse whether it add some value to the market or not (Barringer & Ireland, 2015).  If the mentioned two pints are not considered by any firm, then it will be no use to obtain the intellectual property. Other aspect is that the patents are benefitted with innovative ideas in order to remain stable in the competitive market.

The Importance of Intellectual Property in Growth

Utilization of intellectual properties

It is very difficult to utilize the intellectual properties because not every firms have a deep knowledge about it. If a firm fails to utilize it properly, then it may face some major mistakes. The four major mistakes are:

• Unable to identify each intellectual properties
• Unable to recognize the value if it
• Unable to protect those who actually needs protection and
• Unable to integrate into the strategy set

If a firm utilizes the intellectual property in a better way, then it will help to grow and create several new ways and opportunities as well in which the resources will be kept a very low level. This can only be possible by outsourcing the departments and emphasizing on the new ideas (Barringer & Ireland, 2015). When I was working at Nupo A/S founded in 2014, it used to outsource its materials which resulted in the decrement of the employees and created more flexible business. It helped the firm to react faster to the new market trends.

Informal vs. formal

In the case of Nupo A/S, the business changed itself from being formal to being informal to increase the growth of the firm. But it may increase the expenses of the human capital requirements because to manage the business by outsourcing the products is difficult. Taking an example of Netflix. They transformed their business form formal to informal. It created more flexibility and freedom as mentioned in McCord like “…if we asked people to rely on logic and common sense instead of formal policies, most of the time we would get better results, and at a lower cost.” (McCord, 2014). So, it can be clearly stated that if the business turns into being informal rather than being formal, then it will definitely grow and earn huge profit by performing better. But according to me, I would like to suggest that despite of gaining profits, it also created unnecessary burdens because it will be difficult to manage the human capital.

Thus, to conclude this reflection, I must share my own experiences that it is very important to maintain a balance between formal as well as informal practises.  I personally believe that informal practises needs efficient communication which can be an issue further. Similarly, in the case of 22cans, it failed to grow because of the inefficient ranking of the funds

References

Autio, E. & ACS, Z. (2010). Intellectual Property Protection and the Formation of Entrepreneurial Growth Aspirations. Strategic Entrepreneurship Journal, 4: 234-251.

Barringer, B.R. & Ireland, R.D. (2015). Entrepreneurship: successfully Launching New     Ventures, Global Edition, 5^th edition, pp. 424-461. Upper Saddle River, NJ: Pearson   Education.

Barringer, B.R. & Ireland, R.D. (2015). Entrepreneurship: successfully Launching New     Ventures, Global Edition, 5^th edition, pp. 424-461. Upper Saddle River, NJ: Pearson   Education

Bhide, A. (1992). Bootstrap Finance: The Art of Start-ups. Harvard Business Review, 70(6): 109-117.

Campbell, C. (2015). Peter Molyneux’s Godus is a failure of trust and a warning for others,
Polygon, Vox Media.  Available at URL:  https://www.polygon.com/2015/2/11/8020551/peter-molyneuxs-godus-is a-failure-of-trust-     and-a-warning-for-others

Churchill, N.C. & Mullins, J.W. (2001). How Fast Can Your Company Afford to Grow?   Harvard Business Review, 79(5): 135-142.

McCord, P. (2014). How Netflix Reinvented HR. (cover story). Harvard Business Review, 92(1/2): 70-76.

Mollick, E. (2014). The dynamics of crowd funding: An exploratory study. Journal of Business Venturing, 29(1): 1-16.

Ram, M. (2000). Professionals at work – transition in a small service firm. Journal of Small Business and Enterprise Development, 7(1): 69-77.

Smith, J.K. & Smith, R.L. (2000). Entrepreneurial Finance, pp. 22-54. New York, NY: John WileyTomory, E. (2011). Bootstrap Financing: Four Case Studies of Technology Companies.International Journal of Management Cases, 13(3): 531-538.

Walker, J. (2015). Peter Molyneux Interview: “I haven’t got a reputation in this industry any
more”, Rock Paper Shotgun Ltd.
Available at URL:  https://www.rockpapershotgun.com/2015/02/13/peter-molyneux-interview-godus- reputation-kickstarter