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Introduction to Entrepreneurship and Why It is Important for Every National and International Economy

Question:

Discuss About The Sensory Characterization Consumer Profile?

Entrepreneurship, in simple words, is the process that involves establishing a new business. The person who establishes this new business is known as an entrepreneur. The subject of Entrepreneurship is tremendously wide. To the deep end of logic, Entrepreneurship defines a style of thinking and it is predominantly an attitude which involves finding solutions to problems and thus generating value (Business News Daily, 2017). Entrepreneurship is absolutely vital for every national and international economy as it provides a platform for innovation and that provides base to growth. Which is why various governments are encouraging and expansively working to provide support and propagate businesses by offering grants, aids and subsidies.

My new business idea involves the institution of a ‘currency consultation’ firm. Given the economic scenario at the moment, we have noticed that there are enormous fluctuations in the currency market specifically in the Australian Dollar - US dollar pair. Over a span of last three years alone, the domestic currency has faced a low of 0.6861 and a high of 1.0608 (XE, 2017). No doubt, such sharp movements of the currency will not pose an impact directly on people, but there are numerous businesses including but not limited to exports and imports where such fluctuations tend to have a major influence (ABC News, 2015). The main target of the currency consulting firm is to provide assistance to clients for tracing, inspecting, governing, working at reducing the impact as well as taking due benefit of these fluctuations.

This is the primary service offered by the firm where in the clients will be advised on a daily basis upon their trade orders. They will be given a daily update on the currency movements and how they can protect themselves against unwanted risk. The detailed analysis would be done on the basis of fundamentals and technical. Fundamental analysis refers to scrutinizing the economic data of countries and gaining an understanding of its influence over the currency. The data which is collected includes GDP growth rate, inflation rate, interest rate fluctuation, unemployment rate and meeting minutes of the Reserve bank of Australia. (Forex Factory, 2017). On the other hand technical analysis includes the study of historic fluctuations in the currency, applying formulae and mathematically predicting the upcoming trends. This can be accomplished by the use of Reuters’ and Bloomberg terminals. They are the most effective tools of financial analysis (Financial Times, 2017)

The Primary and Secondary Services Offered by the Currency Consultation Firm

This is a secondary service which requires the firm to send daily updates to clients via reports. This also helps in eliminating any kind of miscommunication when advises are given on the phone.

Most of the importers and exporters look at live rates from leading news channels and websites, however, they offer a lagged rate and banks do not accept this rate. This is why we will be providing our clients with a Reuter or Bloomberg linked live screen installed on their personal computers. This will help them negotiate with the bank.

Proposed by Alexander Osterwalder, Business model canvas is a strategic management tool designed specifically to help new startups formulate and organize their plans and get a clear picture of their venture. It provides convenience of business planning and organizing and assists in defining a complicated business in nine simple components (Forbes, 2012).  

Customer segments essentially involves the market of specific customers targeted by the firm or Target market. Phillip Kotler defines target market as a set of well-defined set of customers whose needs the organization plans to satisfy (Creighton University, 2002). Customer segments predominantly targeted by the company would include businesses importing to Australia. At large, Australian imports include gold, wheat, petroleum, iron ore and coal. Businesses that are exporting from Australia to other parts of the world products including but not limited to natural gas, agricultural products, minerals and wool will also for a part of primary target market. Geographically, the business will commence operations in the heart of the country, Sydney. This would be an advantage given the city is home for a sundry number of export and import businesses. However clienteles would be targeted throughout the country.

Value proposition refers to the ways in which any organization creates tangible on intangible value for its clients. The currency consulting firm aims to achieve three targets

Increase awareness of the currency markets: Currency fluctuations majorly affect importers and exporters of our country. Yet little is done to gain knowledge due to the complexity of the subject. This firm predominantly aims to increase awareness amongst clients about currency markets, factors that influence currency movements and how can businesses remain protected from them. This awareness will eventually help them predict near future fluctuations in the currency and hence will be in a better position to mitigate any risks arising from them.

Reduce risks faced by clients due to currency fluctuations: The barometer of trade in Australia is consistently rising and the forecast looking upwards for the same (Reuters, 2017). This is demonstrated by the facts and figures showing that Australia has exported AUD 31.05bn and has imported AUD 30.66bn worth of goods and services in July this year (Trading Economic, 2017). The currency fluctuations often lead to losses faced by our exporters and importers as they find it difficult to predict currency movements. Our firm aims to reduce these risks so the clients can be better equipped to hedge their trade transactions.

Business Model Canvas and How It Assists Startups in Defining Their Venture

Increase in profit margins: Like every other consultancy, the measurable goal of our firm would be to increase profit margins of our clients by guiding them in the most appropriate manner about how they can hedge their currency. This is the only tangible value proposition offered by the firm and hence is the most important. Once clients are aware about how the currency market functions and what the factors behind these daily fluctuations are, they can make better decisions and hence reduce the risks associated with them therefore leading to increased profits.

Customer relationships are an important aspect of any business. They pave way for loyal customers and increase organizational efficiency. There are following ways in which the firm will ensure long term and healthy customer relations.

  1. Monthly review meetings: Regular review meetings with customers help them stay connected to the organization. These meetings ensure that customer feedbacks and improvisation plans are followed through and any grievances from the clients can be efficiently addressed.
  2. Regular telephonic feedbacks: Meetings can be conducted monthly but besides that telephonic conversations help in relationship building with clients. Wishing them on their birthdays/anniversaries etc. will also add a personalized touch and further assist in client retention.
  3. Daily advisory: As a part of the services offered by the company, daily advisory must be provided to clients about the currency markets, their overview, analysis and forecast.
  4. Daily reports: Everyday reports will be sent to clients. These reports will contain detailed analysis of currency markets along with charts and fundamental details. This is also done to avoid any miscommunication on the phone.
  5. Customer relationship management team: There will be a dedicated team who will work on enhancing customer relations with all the clients. They will ensure that they can be reached all the time and any issues faced by the client will be addressed by them. They will also make sure that clients are wished on special occasions like their birthdays, anniversaries, New Year and Christmas etc.

Channels are mediums that connect the organization to its clients. We will be reaching out to clients by the following means:

  1. Events: A lot of events are conducted regularly by various export and import associations like Export council of Australia, Australian exporters association, Food and beverage importers association of Australia. These events are attended by all renowned exporters and importers of the country and hence will provide us with a perfect platform to market our services.
  2. Referrals: Referrals are an efficient way of getting more clients on board. They are basically friends, associates or acquaintances of our clients. If the client is happy with our services, they may refer other exporters and importers to associate with us (Berman, 2016). Certain referral bonuses can also be offered as this way existing clients will also work at introducing new prospects to the organization.
  3. Cold calling: There will be a dedicated presales team whose job would be to cold call all the exporters and importers in the country, tell them about our organization and fix meetings with them. They is the more traditional channel of reaching out to clients.
  4. Marketing and PR activities: Television ads and sponsoring events of import-export associations will help to spread awareness about our services. There will be a marketing and PR team who will ensure that the firm is well branded.
  5. One on one meetings: Once the presales team does cold calling, one on one meetings will be conducted with clients across the country with an aim to market our services, get them on board and also enhance our knowledge about the industry news.
  1. CRM: customer relationship management is an important aspect of maintaining healthy and fruitful relationships with customers once they are on board. Their aim is an increased level of customer retention. And bridging the gap between client and organizations (Mithas, 2013).
  2. Research: Research team is the basis on which a currency consulting firm can function. Our product is our detailed knowledge on the currency markets and this can be accomplished on with the help of a very eminent and competent research team. The research team will formulate the company’s outlook on the currency and hence they are the backbone of the organization.
  3. Market analysis: Market analysis would be done by each and every person in the organization. Everyday a meeting would be conducted where members from all the teams would come together and discuss their viewpoints on the currency market. Based on a combined analysis, the organization will form one view, which will then be communicated to the clients.
  4. Selling: Like every other organization, services needs to be sold and that requires a dedicated sales team who will reach out to potential clients and help to bring them on board. They are driven by revenue generation targets.
  5. Marketing and PR: Marketing and PR are activities revolving around spreading awareness about the organization and its services to a wider audience (Nath, 2014). This assists in building a brand name for the firm and ensures that the goodwill of the organization sustains.
  6. Customer profiling: This is a fairly new concept and helps organizations segment their market and define their target customers. This includes creating a portrait of customers, understanding their needs and goals and eventually serving them based on these outlines (Varela, 2014).
  7. Pre-sale service: Often organizations make the mistake of reaching out to prospective clients without enough knowledge about them. Pre-sales activities involve gathering information about the clients, making a customized presentation for them and assisting sales team with any other information that they might require (Agnihotri, 2017).
  8. After sale service: Once the client comes on board, it is imperative that services promised are efficiently delivered. Over promising leads to dissatisfied clients and higher client attrition.
  1. Human resource: Like every other organization, humans are key resources of the firm. This includes every member of the organization. Every business must make sure their employees are satisfied, motivated and fairly compensated (Kramar, 2014).
  2. Bloomberg or Reuter’s terminal: As discussed above, the firm requires a Bloomberg or a Reuter’s terminal in order to get the exact exchange rate which is accepted by the banks. This terminal is useful in receiving live news, helps in getting charts and previous data of the currency dating back to over 100 years and hence is an extremely important research tool.
  3. Library of research reports: As mentioned before, research forms the backbone of this organization and hence it is crucial that from the first day, all the reports released by the firm are accumulated together as they will be a major resource of the firm.
  4. Data team: Data team will fetch data about exporters and importers around the country and their details. This data can also be a very useful resource for the firm in the years to come.
  1. Head of sales who will have a sales team reporting to him and will take complete responsibility in ensuring revenue generation for the company.
  2. Head of consulting will lead the research and analytics team and will take complete responsibility for appropriate view of the market and correct forecast of the currency market.

The firm offers niche services and therefore the customers targeted would comprise of export or import businesses earning a turnover greater than AUD 20 million. Many firms make immense mistakes in pricing their products because they fail to consider that a similar pricing strategy cannot work well for every client (Forbes, 2015). Hence the firm is equipped to offer two separate business models to clients and they can select the one they prefer.

Fixed Fee: As the name suggests, services offered will be charged as a fixed consultation fee per annum. This will be varied for every client and will be decided based on their annual trade turnover. Payment structure will include two parts. One part of the remuneration will be paid in advance whereas the second part will be paid after 6 months of regular service. The advance fee model will help the firm cover costs for client acquisitions. One advantage of this model is that it establishes an element of trust in the clients specifically when they are provided with an option to make half the payment later.

Profit Sharing: Just as the name suggests, this model provides clients with an option to share the profits earned six monthly, monthly or quarterly. The payment cycle will depend on the business cycles of the client. This facility is provided to the clients because the time duration between receiving an order by the client and actual delivery of the goods can vary between one to six months (Inc., 2010). Appropriate systems would be in place to track when and exactly how much have clients earned from the expert advices offered by the firm. In addition, an updated portfolio management sheet shall be provided to all the clients.

Customer Segments and Value Proposition Offered by the Firm

There are four kinds of costs involved with the formulation of this firm as given below. They are self-explanatory.

  1. Employee salaries
  2. Land and building expense
  3. Bloomberg Reuters terminal
  4. Marketing and PR costs

Minimum viable product is the most basic product or service offered by any organization. It is a no frills product and defines the least that organization can offer (Blank, 2013). Research reports and daily advisory to all clients is the minimum viable product offered by the firm.

Feasibility analysis is gaining an understanding of how successfully can any project be completed. This is predominantly determined by four important factors (The Balance, 2017).

Upon analysis of market feasibility of a currency consulting firm, it has been noted that the market offers a brilliant opportunity for the formulation of this firm. The major competition include brokers who are not solely focused on providing consultancy to clients. Also the high density of exporters and importers in the Australian subcontinent provides us with a large market to sell our services.

Technically, the service is simple to understand and does not require a lot of resources. Clients will be communicated over the phone. Bloomberg and Reuter terminals will require experts who can perform technical and fundamental analysis using them. These experts will be hired from best universities and firms and will be given due training.

Human resource will be hired from tier 1 universities across the country with exceptional relevant experience. There are various universities which are now offering courses on capital markets and hence this feasibility aspect can also be achieved.

Like every other business, initial capital will be raised with the help of families and friends of the key partners. Bank loans can be applied for and angel investors will be approached for funding purposes.

References:

ABC News, 2015, ‘Falling dollar, rising fortune’ https://www.abc.net.au/news/2015-08-05/jericho-a-falling-dollar,-a-rising-fortune/6673074, viewed on 3 October, 2017.

Agnihotri, R., Trainor, K. J., Itani, O. S., & Rodriguez, M. 2017. Examining the role of sales-based CRM technology and social media use on post-sale service behaviors in India. Journal of Business Research, 81, 144-154.

Berman, B. 2016. Referral marketing: Harnessing the power of your customers. Business Horizons, 59(1), 19-28.

Blank, S. 2013. Why the lean start-up changes everything. Harvard business review, 91(5), 63-72.

Business News Daily, 2017, ‘What is entrepreneurship’, https://www.businessnewsdaily.com/2642-entrepreneurship.html, viewed on 3 October, 2017.

Financial Times, 2017, ‘Bloomberg suffers rare drop’, https://www.ft.com/content/6b547cb8-1396-11e7-80f4-13e067d5072c, viewed on 3 October, 2017.

Forbes, 2012, ‘Business model canvas’, https://www.forbes.com/sites/tedgreenwald/2012/01/31/business-model-canvas-a-simple-tool-for-designing-innovative-business-models/#5f0a29bf16a7, viewed on 3 October, 2017.

Forbes, 2015, ‘The biggest mistake you can make while pricing services’, https://www.forbes.com/sites/ianaltman/2015/12/22/the-biggest-mistake-you-can-make-pricing-services/#d5ca15da38a8, viewed on 3 October, 2017.

Forex Factory, 2017, ‘Economic calendar’, https://www.forexfactory.com/calendar.php, viewed on viewed on 3 October, 2017.

Inc., 2010, ‘How to build a profit sharing model’, https://www.inc.com/guides/2010/04/profit-sharing-plan.html, viewed on 3 October, 2017.

Kotler, P, 2011, https://people.creighton.edu/~shu02225/nps_c_04.html, viewed on 3 October, 2017.

Kramar, R. 2014. Beyond strategic human resource management: is sustainable human resource management the next approach?. The International Journal of Human Resource Management, 25(8), 1069-1089.

Mithas, S., Krishnan, M. S., & Fornell, C. 2013, May. Why do customer relationship management applications affect customer satisfaction? American Marketing Association.

Nath, P., & Bell, M. 2016. A study of the structural integration of the marketing and PR functions in the C-suite. Journal of Marketing Communications, 22(6), 626-652.

Reuters, 2017, ‘Australia’s central bank holds fire as economy on the rebound’, https://www.reuters.com/article/us-australia-economy-currentaccount/australias-central-bank-holds-fire-as-economy-on-the-rebound-idUSKCN1BG07D?il=0, viewed on 3 October, 2017.

The Balance, 2017, ‘Feasibility study’, https://www.thebalance.com/what-is-a-feasibility-study-3514853, viewed on 3 October, 2017.

Trading Economics, 2017, ‘Australian Exports’, https://tradingeconomics.com/australia/exports, viewed on 20 September, 2017.

Trading Economics, 2017, ‘Australian Imports’, https://tradingeconomics.com/australia/imports, viewed on 20 September, 2017.

Varela, P., & Ares, G. (Eds.). 2014. Novel techniques in sensory characterization and consumer profiling. CRC Press.

XE, 2017, ‘AUD to USD Chart’, https://www.xe.com/currencycharts/?from=AUD&to=USD&view=5Y, viewed on 3 October, 2017.

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