How concerned are you about the drop in the rate of entrepreneurship? What do you think are the primary causes of the decline? What action should be taken to increase the rate of new business start-ups? How effective will these actions be? What factors influence your desire to work in an entrepreneurial firm versus an established firm?
The decline in entrepreneurship is alarming as fewer firms are being created which translates to the number of jobs that are created by startups being on the decline. Economic recessions over the past decades have been more frequent and increasingly severe. Firms that are already established have the mechanism to survive but startups are more vulnerable to these financial changes and often are not able to weather the storm. Another reason for the decline in entrepreneurship is the prevalence of monopolies and duopolies which disrupt the dynamics of demand and supply and tend to discourage entrepreneurs (Litan, 2016). Other causes include reduced rates of immigration and economic shocks caused by natural disruptions like the pandemic. The US should review its immigration policy to allow an influx of new ideas and better taxing and licensing policies that are more favorable to new enterprises should be effected (Goldschlag & Tabarrok, 2018). These responses will have different effects on slowing the decline of entrepreneurship and perhaps reversing it once a combination of these and other measures are implemented. Personally, working in an entrepreneurial firm is more satisfactory than being affiliated with an established firm because of the opportunity to be part of the solution to the challenges of these changing times and the increased opportunities for reaching my fullest potential as opposed to working for a big firm that is more likely to be inflexible.
What are the benefits and costs of making this move? What are the long-run risks of this change? Do the benefits outweigh the costs? Is Alphabet trying to build an ambidextrous organization? Should it be doing so? If yes, what actions can it take to build an ambidextrous firm? Do these issues raise concerns about Alphabet’s business portfolio? Should the firm stay the course with the business it owns, or should it change? If it should change, how should it change?
The move is strategically calculated to minimize the risk from losses and the ensuing question of liability. It also helps the different parts of the entire business to be more accountable and self-sustaining. This is useful in protecting Google from the increasing risk that is prevalent in the technology startups that it involves itself with which are costly and pose huge financial risks in case of failure (Alcacer, Sadun, Hull & Herman, 2018). Long-run risks include challenges in effecting sound management in case conflicts arise, the increased complexity which compound the difficulties faced in tracking assets, properties, and liabilities of the organization. In the case of Google, the establishment of a new organizational structure in the form of the holding company Alphabet is potentially more beneficial because technological changes tend to be sudden and disruptive with time and require sound risk management plans that can steer organizations through the problems towards growth and success.
Do you see Tesla’s business model and product as offering a sustaining or disruptive innovation? Why do you see it this way? In what ways will incumbent firms be able to respond effectively to Tesla? In what ways will it be difficult? Whether or not you see Tesla as offering a disruptive innovation, what would be a different way that an entrepreneurial firm could offer a disruptive innovation in this market?
Tesla's business model and product offer a sustaining and disruptive innovation. It is a sustaining innovation in the sense that the technology used has the potential to be environmentally sustainable and in the future be economically sustainable as the focus of the world turn to more investments in renewable forms of energy (Chen & Perez, 2018). It is disruptive in the sense that it revolutionizes the traditional way of doing business by dealing directly with the customer and thus be in a better position to achieve customer satisfaction. Auto manufacturers can respond to this move by Tesla by investing their considerable capital in reorganizing their way of operating to follow the lead of Tesla to avoid becoming irrelevant in the coming years. The difficulties these companies have to overcome include coming up with technical concepts without infringing on the intellectual properties of the Tesla Corporation. Also, these businesses stand to lose financially because of the cost of restructuring their production facilities to better suit them to the manufacture of electric automobiles which are the future of the industry. Well-established motor giants can fund research in alternatives to fossil fuels for example ways of converting solar power into synthetic fuels that would require little modification to power the current motor vehicles. This would prove equally disruptive as the cost of manufacturing batteries is still very high, which is the most significant and limiting challenge faced by Tesla (Liu & Meng, 2017). By circumventing this challenge these auto manufacturers stand to reap lots of benefits and retain their power and influence in the industry.
How would you strike a balance to ensure that shareholders have a voice while limiting the cost of unnecessary proposals? Are the current rules appropriate? If not, how would you change them?
To protect the financial assets of a company from potentially wasteful proposals policies should be implemented that require shareholders forwarding proposals to meet some requirements such as being willing to stake on their proposals (Cuñat, Gine & Guadalupe, 2013). The proposals should also be subjected to screening through a framework where they can be voted for to prevent potentially disastrous proposals from gaining funding and hence resulting in losses for the company. Thus a balance can be achieved in which shareholders have a voice but don’t abuse it and create unnecessary spending.
References
Alcacer, J., Sadun, R., Hull, O., & Herman, K. (2018, February 26). Alphabet Eyes New Frontiers. Retrieved August 2, 2021, from https://hbsp.harvard.edu/product/717418-PDF-ENG
Chen, Y., & Perez, Y. (2018). Business Model Design: Lessons Learned from Tesla Motors. Towards a Sustainable Economy Sustainability and Innovation, 53-69. doi:10.1007/978-3-319-79060-2_4
Cuñat, V., Gine, M., & Guadalupe, M. (2013). Say Pays! Shareholder Voice and Firm Performance. doi:10.17848/wp13-192
Goldschlag, N., & Tabarrok, A. (2018). Is regulation to blame for the decline in American entrepreneurship? Economic Policy, 33(93), 5-44. doi:10.1093/epolic/eix019
Litan, R. E. (2016). Entrepreneurship, Innovation, and Antitrust. The Antitrust Bulletin, 61(4), 580-594. doi:10.1177/0003603x16673946
Liu, J., & Meng, Z. (2017). Innovation Model Analysis of New Energy Vehicles: Taking Toyota, Tesla and BYD as an Example. Procedia Engineering, 174, 965-972. doi:10.1016/j.proeng.2017.01.248
