Due to competition and changing preferences, an entrepreneur must plan any business activity and micro manage the risks involved. Thus, this analytical treatise attempts to explicitly discuss my risk tolerance for starting a business. Besides, the paper examines the five factors of production and how businesses compete with each other. In addition, the paper presents the lessons learned and the most valuable concepts from the class videos.
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The term sustainability refers to the ability to survive a risk level while at the same time within profitability mode. In business environment, sustainability is affected by the forces in the market, decision science, business structure, and real financial management both in short and long term. Therefore, a business must put in place stringent measures and strategies aimed and monitoring risk modules within feasible levels in order to effectively manage its operations strategies (Nickels et al. 25).
Reflectively, there is a need for a certain level of operational risks in the business management matrix in order to track any changes and success of different business strategies. I may tolerate operational risks which involve threats associated with processes, people, and technological elements of running the business. The essential human input requirement towards the entry planning and development phases is part of the operational risk that has a positive impact on the stability of a business. Notwithstanding, the diversification of the workforce in a business may ensure flexibility in the definition of the interdependent components that translate to the realization of an elastic business operation. The above risk will ensure that my business has an up-to-date policy on safety and change strategies (Nickels et al. 35).
It will also ensure that the content of the policy is made available to all stakeholders in the business. In addition, the risk will facilitate the establishment of clear reporting, investigation and resolution procedures.
Factors of production
The mechanization of production demands that the production system matches production efficiency, while assuring quality of the supplied goods. Technology delivers on both efficiency and quality in the production of goods and services. With the appropriate technology, decisions can be made reliably and in a timely manner to ensure quality and efficiency in production. Quality improvement, as a result of technology, will be used to measure, assess, and improve the production channel. The success in quality improvement and efficient and cost effective production management is dependent on the alignment of the production soft skills and sustainability strategy to appropriate technology (Nickels et al. 15).
Labor basically refers to the mental and physical skills of persons that are accessible and exploitable in generating goods and services. Knowing how to improve quality is crucial in the growth of a business enterprise. Improved quality has great reward to business owners. Since the employees and other forms of human talent are permanently employed in the production process, they should be engaged in the production process to ensure that the company optimizes labor as a factor of production towards efficiency. Besides, in order to avoid crisis and unavoidable production breakdown, the human skill or talent should be engaged on a daily running of the production cycle (Hisrich, 21).
Capital, as a factor of production, refers to all forms of aids, finance, and initial cost outlay that a business activity needs to roll out its production chain. These aids facilitate constant and continuous production of goods and services for consumers. All businesses require capital for operation. Sources of capital can either be short term or long term. A business needs sources of capital to meet seasonal or temporary fluctuations in the position of funds. Working capital management is important to ensure that a business does not tie excessive cash flows in working capital. Further, it enables management to ensure that sufficient production of goods and services is maintained (Hisrich, 17).
Natural resource as a factor of production refers to all natural reserves that are employed constantly in the process of production. Among the examples of natural resources are land, business structure sites and naturally existing raw materials that are needed to complete the production process for goods and services. Without the natural resources, a business can neither exist nor support the production process (Hisrich, 22).
Entrepreneurship ability as a factor of production refers to ability to combine the other factors of production such as capital, natural resources, labor and technology to create a sensible and sustainable process of producing goods and services. Entrepreneurship ability provides foresight which is very crucial since it gives a business rough perspective and an overview of the future concerning the expected and unexpected changes and challenges in the production of goods and services.
How businesses compete
Businesses compete with each other through the production of competitive products in terms of quality, price, quantity, and packaging. Besides, businesses design attractive advertisement and engage in corporate social responsibility to ensure customer loyalty and preference over their competitors (Hisrich, 19).
Important concepts from the videos
The main measures of entrepreneurship skills are scored on motivation, personal attitude and aptitude. Action planning in entrepreneurship is of importance to create solution oriented task and strategy implementation secession for quantifying task orientation levels. Thus, a budding entrepreneur must possess task orientation leadership skills at an individual task management level in reviewing actual and expected outcome of any business opportunity. Therefore, psychological stability is a recipe for success in the field of entrepreneurship since the entrepreneur will have to sometimes work under pressure while at the same time monitoring the quality of his or her services (Rothwell, 31).
Hisrich, Ronald. Entrepreneurship, New York: McGraw-Hill Education, 2011. Print.
Nickels, Williams, James McHugh and Susan McHugh. Understanding business, London, UK: McGraw-Hill Education, 2012. Print.
Rothwell, William. Career planning and succession management: developing your organization’s talent for today and tomorrow, Westport: Greenwood Publishing Group, 2005. Print.