Enterprise Strategy of of Prince Prince Alwaleed Bin Talet - Term Paper Example

This study relates the characteristics, qualities and personality of Prince Prince Alwaleed Bin Talet to the suggested image of an entrepreneur found by several authors. The trend of business is going towards self, so much so that entrepreneurs must assess their qualities and capabilities to be able to understand their role in the organization. The lessons learned from the interview with Prince Talat may well be applied by the entrepreneurs who are planning to be one. The study has outlined the ABC of an entrepreneur to strongly support whether one is destined to be an entrepreneur. It has also presented in brief the role of an enterprise in the organization and how does it stimulates entrepreneurial learning and development Enterprise Strategy Assessing the role of the entrepreneur within the organisation. Table of Contents Abstract Introduction..................................................................................................................................... 3 Prince Alwaleed Bin Talet ............................................................................................................ 4 The enterprise strategies within organization…………………………………………………… 4 The role of an enterprise in the organization and how does it stimulate entrepreneurial learning and development……………………………………………… .6 Conclusion.................................................................................................................... ............. 12 References...............................................................................................................................13 Enterprise Strategy Assessing the role of the entrepreneur within the organisation Introduction Many people are encouraged to start their own business, to begin as sole proprietors and become an entrepreneur. According to the Department for Business Innovation & Skills in UK, there are 1,296,905 registered enterprises in UK as of 2008 (SME 2009) Sad to say, many of them are forced to go out of business after two to three years of operation because of failure. Failure rates have been high, and some are due to lack of capital, lack of salesmanship, technical knowledge, and up to date knowledge of production. But whatever technical reasons are there, the ability to manage comes out heavily as an end result. McFarland, (1974, p.61) said that in the United States, anybody who has the resources can start or withdraw a business because this is not controlled by the government. Accordingly, the decision to become an entrepreneur is purely a choice of an individual. McFarland noted that many entrepreneurs go into the field thoroughly unprepared and meet the economic test of survival. Some manage to stay afloat because they do not know how much capital they have been using up and how much liabilities they have incurred. In the end, those who survive are those who have the managerial skills in business. It is an irony, as MacFarland observed, that many entrepreneurial failures occur during boom times. Reasons for that are the easy credit, high demands for the products and the general optimism on the economy. Because of these, many executives were enticed to go into enterprise business without proper planning, insufficient capital and lack of skills. Eventually, the entrepreneur suffers failure because he failed the test of economic pressures. However, despite these pressures, some firms survive and show an extreme degree of tenacity. An example is Prince Alwaleed Bin Talet, who survived the economic downturns in his investment portfolio. The fortunes he got from his investments in stocks slowly fell down as the economic crisis had its crunch on them. How the Prince survived this thru his entrepreneurial skills and strategies will be the subject of our discussion. Prince Alwaleed Bin Talet We have a lot to learn from Prince Alwaleed Bin Talet who is a very successful entrepreneur in the Middle East. One will wonder and do a lot of thinking how a $30,000 gift and $300,000 loan from his father (Zendran, 2010, p. 11) made Prince Talat the 22nd wealthiest person in the world, according to the 2009 Forbes World’s billionaire’s list. Prince Talet recalled that his first investment was a partnership with Korean construction firm that needed someone from Saudi. Thriftiness was his code as he invested every penny he earned, and the rest is history. Prince Talat is the Chairman of the Kingdom Holding Company that has substantial investment in Citigroup, News Corp., Four Seasons Hotel and Fairmont Management companies. He has investments in Apple Computers, Motorola and AOL aside from many other investment concerns. An entrepreneur is just not an ordinary man. He assumes different roles as an entrepreneur, first is in his organization and second is in the economy. The enterprise strategies within organization We will take the example of Prince Talal in defining an enterprise strategy. An enterprise strategy is one that is developed by the Chief Executive, or the owner, top management or the Board of Directors of the company. According to Business Resource, critical factors to be considered in enterprise strategies are its mission, vision, codes of conducts/ethics, reputation, risk management, communication to its stakeholders. The enterprise strategy although not specifically stated, also includes how it should approach a crisis situation, its approach to the natural environment and the society. A strategy defines how the enterprise addresses the competitive market place and how will it be implemented, and supported in the day to day operations. First, in creating a strategy, an entrepreneur must decide the overall objective of the enterprise and find out if the market is very attractive and the company is strong and could invest and support the project opportunity. Prince Talat saw an attractive market of real estate in Saudi. He believes there is a good business opportunity in real estate in Saudi where there is big demand as against supply of housing. For instance, he sees that Jeddah has no visible transformation for the past three decades. As an entrepreneur, he sees this as an opportunity so much so that he plans to build the highest rise tower in the world, higher than one kilometre. His plans have impact in the community, as again, he sensed the shortage of housing in Saudi Arabia. He saw that demand for housing is more than supply and he answered this need by a housing project of at least 12,000 units that can accommodate about 150,000 people. He uses foresight that when the mortgage law is passed in Saudi, which he hoped will be passed very soon; their company are already entrenched as a niche in the market Second, If the market is very attractive but the enterprise is one of the weaker ones in the industry the entrepreneur must concentrate on strengthening the enterprise, using the offering as a stepping stone toward this objective. Prince Talal used “Beachead strategies” to get hold of the market”. Baskerville & Flanagan said this strategy is used by entrepreneurs to strengthen their hold of the market, to get access and acceptance of the market. Here, the entrepreneur may partner with established alliances and networks to establish acceptance before doing the business on their own. By partnering with established brand hotels in America, like Four Seasons with Bill Gates, and the famous Fairmont Brand with the Colony Group, Prince Talat became ready for the big push in their own hotels they established in Europe. Third, If the market is not especially attractive, but your enterprise is one of the strongest in the industry then an effective marketing and sales effort for your offering will be good for generating near term profits. This is especially true in the investments of the Prince, as economic crisis hurt his investments. His initial investments in Citigroup and Apple doubled its profit, but with the downfall created by the economic crisis, shares of stocks were down. However, the Prince believes that these are only temporary conditions and is firm in his prediction that this will soon pass. He even infused fresh capital (value unknown) to Citigroup. Fourth, If the market is not especially attractive and the enterprise is one of the weaker ones in the industry the entrepreneur should promote this offering only if it supports a more profitable part of the business . This means ann entrepreneur should have focus and should know its market environment and forces affecting the business. Focus is apparent in the strategy of Prince Talal that for the moment, he stops financing and concentrated his investments on real estate in Saudi. The role of an enterprise in the organization and how does it stimulates entrepreneurial learning and development There are a number of ways that an enterprise plays an important role in the organization. Tracy (2005),emphasized that by understanding ones place and role in the economy, an entrepreneur can better position himself to succeed. Castro (n.d.) pointed to her study that showed results of a survey done by Ernst & Young, that 75% of the Americans believe that entrepreneurship will be the defining trend of business of the 21st century. Her study further said that Department of Labor predicted that in 2010, the “self” will be the number one employer. This desire to be an entrepreneur is accordingly "due to access to technology, a global economy and stagnation" (Castro). But to be a successful entrepreneur, he must posses the A-Z qualities described by Baskerville and Flanagan, considered authorities on entrepreneurship. These authors described an entrepreneur as a persistent person and someone who does not readily give up. They are the people who take the risks that others find unimportant, and more so, they create value from almost nothing. These, according to these authors, sum up the qualities that make up an entrepreneur. Accordingly, entrepreneurial leaning and development are factors enhanced by an enterprise. As shown in the A to Z characteristics of an entrepreneurs, some are inherent in the individual, some are learned from formal education, and others are developed by experiences. One example, is the ambiguity in the enterprise. Here, the lesson of an entrepreneur is to interpret an information in a way distinct from the others. For example, The distinguishing character of an entrepreneur is being innovative. Boyes & Melvin (2002, p. 85) argue that sometimes entrepreneurs “do not always develop an abstract idea into reality when starting a new firm”. There are times some people finds a good thing, took the risk and turn their lucky find into a commercial success. Citing an example, Charles Hires, a Pharmacist from Philadelphia, in 1875 tasted tea from an innkeeper’s old family recipe. The tea, which was so delicious to his taste, was made from sixteen wild berries and roots, got him interested to develop this into a commercial drink. With $3,000 loan he started the Hires Root Beer that soon developed into a million dollar business. (Boyes & Melvin) An entrepreneur, Baskerville & Flanagan, said is able to find new ways in solving problems, most often in clever and workable solutions. They have qualities that are “curious, inquisitive, bright and highly flexible in thinking”. One thing about an entrepreneur is that he continues to scan his environment for new trends and is keen observer of any potential investment opportunity. Money to them only comes next to the opportunity and is not considered a barrier. Prince Talat, is innovative himself not only in business, but also in his strategies. He goes out of tradition to employ women in Saudi Arabia. He is the first to hire a woman pilot in 2004, and plans to hire more women in his companies. He has an open policy of supporting employment for women, which to some Sheiks, are against Saudi tradition. He disputed this argument by saying: “How can you have a country advance when 50% of the population is idle?” As such, 65% of his employees are women who wear designer clothes and shoes inside the office. An Abaya is the long sleeved black robe and head scarf worn by Saudi women in public. (Zendran, p.13) An enterprise is led by someone who has the inherent destiny to be an entrepreneur. Destiny is like a vocation, wherein each one of us has a calling, a sense of what one has to be. For the entrepreneur, this is his calling, a role that fulfils his aspirations and at the same time doing good to others. Just like any other vocations, some people have it - some dont. From the very start, the Prince is destined to be an entrepreneur. He disliked politics although he could possibly be a King someday by reason of succession. He is mostly interested is on businesses, investments and in the stock market. The role of the enterprise today is becoming more important in international business. Thinking big or global is the order of the day as entrepreneurs start to make business outside of its horizon. Fast technology, internet and websites make doing global business easier for entrepreneurs. Prince Talat thinks big, maybe due to his resources and connections. Prince Talat, as shown by his business activities, is not limited to the Middle East alone. He has hotels in Europe and America and has partnerships with technology- based companies in U.S. An enterprise develops a leader because he has ideas that seem unimportant to others, and he takes the responsibility of doing this. An enterprise, therefore stimulates someone to become a leader and move ahead because he sees something to be changed and done. In many times in the interview, Prince Talal demonstrated leadership often enough in projects that seem unimportant to others. An example is his real estate forecast, which to some is not outright correct due to the mortgage crisis in the real estate in other country An enterprise develops its people, as such the entrepreneur makes it a point to treat people with equality. The enterprise is led by someone who has charm that builds relationship, cooperation, confidence and loyalty among the people he is involved with. He gets directly involved with his financiers, partners, vendors, sub-contractors, professionals and employees who take charge in the organization. Prince Talal is an example of someone who develops people as he eliminated discrimination on women and hired them as employees. An enterprise has a purpose and meaning of what it is doing for entrepreneurial learning and development. As discussed by Guy Kawasaki, a very successful entrepreneur, an enterprise should increase the quality of life and should change people’s lives for the better; it should be able to correct something wrong which is most prominent in the area of social entrepreneurship and to prevent the end of something good. He said that in an enterprise, money is not the biggest motivation and takes a backseat. He cited his motivation in doing the experiments for Macintosh computers was to make something good, and making money stayed in the background. He also finds motivation where there is meaning that could correct a wrongdoing in the area of social entrepreneurship, like crime, pollution, etc. And lastly, he said people should find motivation and ideas to prevent eroding of something beautiful, like natural resources. An enterprise teaches many things to the entrepreneur. First, the entrepreneur learns to be quirky. Being quirky is being different that is an important marketing strategy to make the product stand out from the rest. Seth Godin, another successful entrepreneur and author of the book, “Purple Cow”, said that being the same is like being invisible. He said that “The world is full of brown cows and to survive you need to stand out from the herd – you need to create the Purple Cow” ; and this is the code practically known by all entrepreneurs. Under a situation of similar products, customers look for products that has added value, sometimes with a totally disregard for the price. Let us take the example of Prince Talal in the real estate. His plan for the highest tower in the world is an added value for the the building. It will be an attraction by itself that will lend value to the real estate. He has added value on this by making it more attractive with its amenities that will improve the city. An entrepreneur knows all this and he applies it to make the product stand out. Next, an enterprise teaches entrepreneurs to manage risk in business. As risk takers, entrepreneurs develop the ability to to risk time and resources for an opportunity that he believes will give development and profit. It doesn’t matter if he fails because he subsists in the idea that: “if I don’t take a chance I will never know what I could have become”. Thus, an enterprise trains an entrepreneur to never give up. “Never give up” stands for the core value of an entrepreneur that ascribes “faith” to what they are doing. Prince Talal never gives up to the point that he is always looking for opportunities for possible investments. Others see failure; he sees it as an opportunity, a chance to learn for character advancement, or simply considers it as an improper timing The risks taken by Prince Talal are many, judging from his investments and undertakings. But his foresight and knowledge of the situation gives him the courage to continue. Example is the risk of his investments in the stock market, which we all know, has suffered a downfall trend . On many occasions, the right timing is the biggest lesson of an enterprise. It teaches the entrepreneur how timing has a great effect on the launching of the product. Many become successful because they were there on the right time and on the right place. Some call this luck, but to the entrepreneurs, this is timing that is due to research, planning and organizing. To borrow the quote from the work of Baskerville and Flanagan, the great Roman Philosopher Seneca of the Ist century said: "Luck is what happens when it meets opportunity". In many instances, an enterprise develops the characteristic of being opportunistic of an entrepreneur. But it should be noted that an entrepreneur is not opportunistic in every opportunity as they are only interested in theirs. Failure of some entrepreneurs, Tom Carpel (2007), points out in his book “the Gold, the Opportunist and the Entrepreneur, are due to chasing too many dreams, and they soon find out that “every pot at the end of the rainbow, will find it devoid of gold but full of broken hearts, dreams and bank accounts … they fail as entrepreneurs because they are enticed by bright shiny objects and seduced by the next new dot bomb and become too distracted by UFOs (Unidentified Flying Opportunities)” Conclusion The role of the enterprise in developing entrepreneurial leaning and development has been emphasized in this study as factors in the success of an enterprise. An entrepreneur assumes a big role in his own organization as his own manager. The success of his organization lies on his shoulder because a lot of effort and resources are at stake. Many things depend on him, and for this he should be properly equipped with the qualities, learning’s and abilities of an entrepreneur. One thing becomes clear in the study that attitude is the greatest attribute that an entrepreneur should have. Sadly, attitude is an inborn characteristic that is not present to everybody. Somebody said (unknown) that when someone has attitude, everything else could be learned. w.c. 2965 References Baskerville, Peter & Flanagan, Neil. (2009). Characteristics of an Entrepreneur. knol. Viewed 21 October 2010 < http://knol.google.com/k/characteristics-of-an-entrepreneur# > Boyes, William and Melvin Michael. 2002. The Successful Entrepreneur. Micro Economics. The Boyes/Melvin Economics, 5th ed. Houghton & Muffin, New York, p. 85 Castro, Michelle. (n.d.)Characteristics of an Entrepreneur. http://www.4-small-businesses.com/characteristics-of-entrepreneur.html Kawasaki, Guy. (n.d.) Video on Entrepreneur and Meaning. Viewed 21 October 2010   McFarland,Drilon E. Causes of Business Failure. Management Principles and Practices. Mcmillan Publishing Co., Inc. New York, 4th ed., 1974, p. 61-62, ..…… Qualities of a leader.Management Principles and Practices, McMillan Publishing Co. Inc. New York, 4th ed. p. 402 Seth Godin (n.d.) Purple Cow . Viewed 21 October 2010 Small and Medium sized Enterprise (SME) Statistics for Statistics for the UK and Regions, 2008. Published 2009. BIS, Department for Business Innovation & Skills, National Statistics. Tracy, Brian. 20 June 2005. The Role of the Entrepreneur. Viewed 21 October 2010 ww.entrepreneur.com/startingabusiness/startupbasics/article78478.html Zendran, Alexandria. (2010) An Interview with Prince Alwaleed Bin Talal. Briefing Book. Intelligent Investing. with Steve Forbes. viewed 21 October 2010 Read More